Quantitative status quo
Relating to my overall vision of leveraging data to become more efficient, effective and inclusive, let’s look into all three dimensions and try to understand how we can measure them and what the potential impact of data-driven approaches may be.
Efficiency: The ratio between input and output. The higher the ratio, the more efficient. In our case, input is the time of the investment team and output is the number of deals processed (yes VC is an outlier business and quality is more important than quantity, I know, read on to “effectiveness”). For more granularity, we split the input into two sub-components “how much time is spent” and “how time is spent”.
The “how much time is spent” shall be constant as we assume that the investment team would not work more or less and not hiring/firing people. Moreover, we can split the overall time spent by stages across the investment process to generate more insights. If we apply the same split on the output side, i.e. number of deals processed in the respective stages, we can measure efficiency quite well across individuals and the team. For example, 8 hours per week spent on “outbound to founder” and “initial review” stages translating into 30 new deals added to the CRM system would mean 16 minutes per new opportunity.
The only way to improve this efficiency ratio (=generate more output with the same input) would be to change “how time is spent”. No surprise.
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