Introduction to Cindicator (CND) Part 6

Cindicator for venture investments. Emotions in investing.

 

Cindicator is a decentralized ecosystem that combines human and artificial intelligence, which is what allows it to provide members of the ecosystem with most precise decisions and forecasts.

The Cindicator technology processes millions of decentralized predictions from analysts and uses artificial intelligence to do so. This gives all members of the Cindicator ecosystem a number of significant benefits. First, it provides them with infrastructure in which investors can safely and efficiently manage their capital. Second, it gives analysts an opportunity to earn income without having to work for a large corporation or to risk their own funds. Finally, it provides up-to-date data and tools to make decisions in the conditions of growing uncertainty.

 

Venture investments as an area of opportunity for Cindicator

Currently, most startups collect funds by announcing that they are having a “round” and then multiple investors or investor syndicates participate in such a round. This trend has been increasing in recent times, because in a syndicate of investors different investors have different skillsets and areas of expertise. For investors, creating a syndicate is a form of group thinking and collective wisdom that allows the investors to minimize the risks and to make better decisions.

When a syndicate has a number of professional investors with different backgrounds, the investors can look at the potential deals from a number of different angles and assess the risks and opportunities better.

The issue, however, is that for most investors the best deal is the deal that they have never done before. Travis Kalanick has founded Uber in 2009 and since then multiple companies have tried to become “Uber of X,” but none of them were able to reach the valuation of Uber. Sergey Brin and Larry Page founded Google in 1998 and many companies, including Microsoft with its Bing search engine, have tried to beat Google, but couldn’t.

Practically speaking, for investors this means that the next Uber will not be an “Uber of X,” but it will be something else and finding new future unicorns is what investors are occupied with.

Obviously, the problem for most traditional investor syndicates and venture capital funds is that they can only have so many partners before they get stuck with having meetings about having meetings and arranging the schedules and times in such a way that multiple partners could share ideas and agree on the deals and direction of the company.

The Cindicator platform combines the collective intelligence of a large number of investors, a much higher number than a single fund could ever get to, with artificial intelligence that processes an incredible amount of data in real time, including various markets, exit deals, the state of the employment market, the state of the economy, and even posts by the founders of promising startup companies on social networks such as Twitter and Facebook. The Cindicator platform then produces buy, sell and hold signals about all kinds of deal and does so completely without any emotions, which, as many investors admit, are still a driving force behind many deals.

 

The role of emotions in human-driven decisions

Up until recently, Elizabeth Holmes was considered to be one of the most successful startup founders in Silicon Valley. Forbes Magazine said that she was world’s first self-made female billionaire.

In the beginning of 2000s, Holmes dropped out of Stanford to found her company, Theranos, that would perform blood tests on one drop of blood that it would be getting with a pinprick of a finger. According to accounts from her story, Holmes hated needles and wanted to create a process for testing blood that was quick and efficient.

On the board of her company, Holmes had Henry Kissinger, former United States Secretary of State, Sam Nunn, former US Senator, Dick Kovacevich, former CEO of Wells Fargo, and many other prominent businessmen and politicians.

In 2015, the estimated value of the Theranos was $9 billion. Many experts agree that Holmes did believe that her company will change the world someday and deliver on its promises. Things Holmes was telling investors were in line with the image of herself that she was building in the media, which was an image of a founder similar to Steve Jobs, a founder of a company on the forefront of groundbreaking technologies and opportunities. The problem is that along the way Holmes was lying to everyone, including investors, journalists and partners such as Walgreens.

According to the criminal investigation into Holmes and Theranos, it started when the company did not share with investors that it had challenges when performing blood tests. Then, the company lied to pharmacy partners first by omission and then explicitly. Later, Theranos started sending blood to regular testing laboratories because it could not perform the tests on its own.

What happened with Theranos is not much different from what happened in the past with Enron, WorldCom, and other companies.

An entrepreneur is always interested in painting the best possible picture for the investors in the company. Even when there are problems, not telling about them has a benefit of new cash potentially coming in and the entrepreneur having money to solve the problems. Experienced investors know all of this and do their best to avoid such scenarios, yet, as history shows, people such as Bernie Madoff and Elizabeth Holmes are still able to deceive investors and play to their emotions.

This is something that is not possible on the Cindicator platform because the ecosystem uses not just human, but also artificial intelligence to analyze data, and artificial intelligence doesn’t care about hype and emotions.