Navigating the private markets today is the equivalent of hailing a cab during rush hour or finding a newly released movie at a nearby Blockbuster ten years ago. Before technology intervened, you had to be in the right place at the right time. Decision-making in the private markets is just as circumstantial: it is opaque, reliant on personal networks, and largely driven by heuristics.

Closing a deal is a resource-intensive, relationship-based process for private companies. And it’s highly uncertain — VC firms typically engage hundreds of companies for each investment they make. …

All,

I want to follow up on my email this weekend about the murders of Ahmaud Arbery, Breonna Taylor, George Floyd and Tony McDade. These atrocities are only some of the more recent acts of race-related hate and violence. There have been more than any of us can know. The sadness, pain, and fear that our communities are expressing now is the culmination of both explicit and implicit prejudice that millions of people experience every single day.

Over the past few days, my own frustration, anger and disappointment have only grown. How can we fix this deeply broken system that claims to provide liberty, equality, and justice for all? I felt unsure of how to help as this all started to unfold 3 days ago. Since then, my confusion has lessened. …

Halo Top has emerged as one of the biggest consumer phenomenons in recent years, with a devoted consumer base that snaps up as much of its low-calorie high protein ice cream as stores can stock. Until recently, they did almost no advertising, and the team continues to forgo a traditional office, instead working remotely and out of a shared coworking space. Halo Top’s rapid rise and the rave product reviews led us to name them as one of the most innovative brands in consumer last year.

In August 2017 Halo Top became the top-selling pint of ice cream in the United States, surpassing even longtime industry stalwarts like Häagen-Dazs and Ben & Jerry’s, and in November 2017 Time Magazine named Halo Top as one of its top inventions of 2017. Given the continued growth of Halo Top, I thought now would be an appropriate time to pause and reflect on all the things that Halo Top got right, explore the ways they grew and iterated, and discuss what lessons their success may hold for the broader CPG community. Our mission is to help entrepreneurs to thrive by giving them the capital and resources they need. Part of that includes helping to shed light on what has driven success historically. …

In September of this year a compilation video of failed SpaceX rocket landings was uploaded to YouTube. The video featured rocket after rocket going up in smoke and flames all set to the Monty Python theme song. To me, the most interesting thing about the video wasn’t the explosions, it was the fact that the compilation was uploaded to YouTube by SpaceX itself with CEO Elon Musk promoting it. Musk celebrated the failures because he recognized that each fiery explosion represented a valuable lesson for SpaceX as they sought to improve. …

Today we are extremely proud to announce the creation of a new, first-of-its-kind venture capital fund: CircleUp Growth Partners.

CircleUp Growth Partners is an early-stage consumer fund with a scalable, data-driven approach to investing in visionary entrepreneurs and products.

It’s time for change

Technology has transformed nearly every type of enterprise in recent years — but private market investing has been a notable exception. Venture capital and private equity firms today largely operate the same way that they did 30 years ago. Deals are sourced and analyzed using a time-consuming, manual processes riddled with human bias. Investment decisions are often based on feeling and “gut” rather than data and facts. Post-close “value-add” is typically a partner with years of experience as an investor (not operator) who spends 10% of their time attending board meetings that are split between 8–10 companies (read: hard to truly add value). This problem is particularly acute in the world of consumer and retail. Investors who want to invest in consumer and retail usually have to spend upwards of 75% of their time sourcing deals manually — this includes going to trade shows around the country to meet companies in-person. …

Earlier this year, we introduced our machine learning platform Helio to the world. We’ve been building Helio for years, so we were thrilled to finally be able to talk about it publicly. Since that introduction, we’ve published a wide variety of different insights powered by Helio on everything from fashion to food to product reviews. One of the things that’s really exciting about Helio is that we’re not limited to a particular category or a particular way of looking at the world. The incredible diversity of the billions of data points that go into Helio means we can look at any given sector from countless angles. …

There is no question that systematic investing plays an important role in the public equities markets: Quant trading strategies now encompass 27% of all U.S. stock trades by investors, up from 14% in 2013. Even investors who have become well known for taking a traditionalist approach, such as Bill Miller and Paul Tudor Jones, now rely on artificial intelligence and machine learning to improve their decision-making.

But when it comes to the private investment asset classes (namely private equity and venture capital), technology-driven quantitative investing is virtually nonexistent.

CircleUp is leading the charge to change this paradigm by bringing a truly data-driven, technology-powered approach to private markets. We’re starting in the consumer packaged goods (CPG) and retail industries, because we believe they are particularly ripe for this kind of change. But ultimately, we believe the path we are currently pioneering in CPG will extend to all sectors of private investment. …

It’s no secret that the largest, oldest CPG brands haven’t innovated at the pace they should have. New CircleUp data released here illustrates how big brands have fallen behind. Pepsi soda, KitKat bars, and Clorox cleaner are decades, near-centuries old, and still have largely unchanged formulas. Just imagine if giants in other industries changed at a similarly slow rate — we might still be using clunky Newton computers and dial-up phones.

This is finally catching up to big CPGs brands, which now find themselves suddenly losing market share to fast-moving startups at an alarming rate. This is thanks to new market dynamics like cheaper marketing through online channels; sinking distribution costs through Amazon, startup-friendly retailers, and direct-to-consumer sales; and widespread consumer demand for more authentic, high-quality goods and services. …