David Weisburd and Erik Torenberg sit down with Dr. Abe Othman, the Head of Data Science at AngelList and the Head of the Investment Committee at the AngelList Quant Fund. Dr. Abe has one of the largest and most granular private market data sets in the world of nearly 15,000 startups. In this discussion we dive deep into the data: power laws, what Dr. Abe’s research tells us about which companies to avoid at all costs, and whether alpha truly exists in venture capital. If you’re ready to level-up your startup or fund with AngelList, visit www.angellist.com/tlp to get started.

(0:00) Episode preview

(1:37) Unintuitive impact of power laws in venture capital

(12:02) Explaining Power Laws to the layperson or finance professional in other asset classes

(14:17) Sponsor: AngelList

(18:50) Does the research reveal what percentage of early stage companies are identifiable as top 1% opportunities?

(20:21) The value of signals (i.e. founders alma maters)

(23:23) Pricing efficiency of startups

(29:00) Markup rates and loss ratios

(32:45) How does the quant fund fit into the model?

(37:31) Solo Gp's tend to hustle harder than traditional incumbent funds

(39:36) Dr. Abe’s view on how the LP community and broader ecosystem has evolved on these topics

(46:28) AUM drift in venture capital