Jigsaw
Jigsaw VC founders Dan Jones and Dan Smith
- Jigsaw VC is a new $75 million early-stage investment vehicle founded by former Global Founders Capital investor Dan Jones and ex-Anthemis Exponential VC Dan Smith.
- The pair have previously invested in companies such as Canva, Revolut, Monese, and Unmind.
- Jigsaw wants to use hedge fund-style "alternative data" including behavioral data and data science to discover the best founders.
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Two prominent European venture capital investors are forming a new $75 million early-stage fund to find the best tech startups.
Dan Jones and Dan Smith, formerly of Global Founders Capital (GFC) and Anthemis' Exponential fund respectively, are planning on bringing hedge fund-style "alternative data" to the world of venture capital.
"Similar to the transformative effect that alternative data and software has had on the hedge fund industry, we strongly believe that the intersection of data and private companies over the past few years provides an inflection point for venture capital to undergo a similar renaissance," Jones told Business Insider in an interview.
"VC investors get paid to invest in tech and innovation but don't apply that same lens when looking inwardly at how to run a top decile fund. We aim to be the Bridgewater of venture capital."
It's quite the comparison. Founded by legendary investor Ray Dalio in 1975, Bridgewater Capital focused on quantitative analysis of macro market themes, emphasizing specific and previously uncorrelated return factors to make investment decisions. The fund is now one of the largest in the world, and Jones hopes Jigsaw can make similar innovations in venture capital.
Jones and Smith have a strong record of fintech investing having invested in over 30 companies in the space. The former was a partner at GFC and was also part of the investment team at Eight Roads, the venture arm of Fidelity, as well as a venture investor at Northzone.
Specifically, the pair will seek to identify talent using data, including signals from behavioural science and even psychographic testing of founders.
Traditionally, the two say, founders are referred by connections in a VC's network and can sometimes subscribe to certain stereotypes or reflect an investor's biases, making the definition of talent limited. Jigsaw will seek to become "talent investors" by correlating available data on founders at the pre-seed and seed stage to improve outcomes. The plan is also to support founders from the pre-investment stage onwards.
"Even the tier one VC funds can't consistently access the best available founders and startups at the early stage. This is due to the sheer volume of opportunities across an increasingly fragmented European landscape whilst simultaneously faced with more diversity of founder archetypes than ever before," Smith said. "The economic model of backing winners is hard and so a data-led investment thesis helps us scale."
Using data to improve outcomes in venture capital is still a relatively nascent area. The data on private companies can be poor, making accurate conclusions difficult. Similarly, companies at the pre-seed and seed stage tend not to be revenue-generating. That may make a data-led approach riskier, something Jigsaw will need to overcome by corralling its own signals.
Previous investments by the pair include companies such as Canva, Revolut, Monese, and Unmind. The $75 million early-stage fund can be scaled to $100 million if needed while a secondary Jigsaw "opportunities vehicle" of an undisclosed size will be used to support some of the pair's prior investments.