In algorithmic investing, investors use a company’s metrics to decide whether to participate in a deal. But when the art of choice is factored out, it becomes more difficult to perform deep due diligence on founders who may be about to receive millions of dollars via a wire transfer.
In practice, attempts to remove bias can create newer, blind spots that are harder to identify.
In theory, algorithmic investing hedges against investors’ preconceived notions and pushes emotions to the side. Fintech unicorn Clearco and venture firm SignalFire have spent years implementing data-focused investment processes, joined more recently by AngelList and Hum Capital. While this approach isn’t new, the movement against solely emotion-based de …
