Strausbaugh says he likes the framework put out by the UChicago Business School called OUTSIDE-IMPACTS - two acronyms that capture the key elements of questions asked when analyzing a deal. If we grade all of those an “A+,” we vigorously pursue those opportunities.” I’ve heard many describe this metaphorically as the Track (market), the Horse (product or service), the Jockey (founder and team), and weather conditions (timing). What are some key components you look for when analyzing a deal?īeazley says that the first thing he looks for is “the pain.” He explains,“What problem is being solved? And how big is the market? Next, I look at the product or service solving the problem, the team behind it, and the timing of their value proposition. “When you can quickly weed out the bad deals and only focus on the ones with the potential to be fund makers, you won’t strain your resources and can improve your batting average by only focusing on strikes,” he says. So, how exactly does the act of pattern recognition improve deal sourcing?Īccording to Beazley, it improves speed and efficiency. We spoke in more depth with both MP Beazley and MP Strausbaugh to better understand the specific patterns they watch for. In contrast, Lakeshore Ventures (AV’s fund for the University of Chicago community) Managing Partner Justin Strausbaugh looks for the uniqueness of the technology or business model and a platform technology that will allow for future growth and pivots. “It takes tons and tons of repetition to develop that pattern recognition.”įor example, Purple Arch Ventures (Alumni Ventures’ fund for the Northwestern community) Managing Partner David Beazley looks for a 3x successful startup-to-exit founder as a positive company characteristic that immediately draws his attention. “You have to see a lot of deals to really understand and truly delineate between what are good companies and what are great companies,” says Wayne Moore, Managing Partner of Alumni Venture’s Seed Fund. In venture capital, it takes analyzing many deals to start seeing patterns of success. Like many professions, the more you do something, the easier it becomes to recognize positive and negative attributes. Pattern recognition is an integral part of venture investing, as many seasoned investors use experiences from the past to more efficiently make decisions about current investments.
Using the benefit of experience to recognize patterns and gather insight into the future is a vital skill known as pattern recognition.
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Growing up, our parents often emphasized the importance of “practice makes perfect.” Whether learning a new sport, studying, or simply learning how to ride a bike, the power of repetition and consistency has long proven beneficial.
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