Navigating the Early-Stage Start-up Investment Landscape: Human Investors vs. Machine Learning Algorithms 7 Feb 2024

Navigating the Early-Stage Start-up Investment Landscape: Human Investors vs. Machine Learning Algorithms

FinNovate Insights Journal

Pragya Gupta

• Year: February 2024
• Volume: 1

Abstract

• In a study, machine learning algorithms outperformed Business Angels by accurately predicting the survival outcomes of 60% of start-ups and achieved an average investment return 184% higher than that of Business Angels.
• The study reveals three key biases among Business Angels: local bias, overconfidence, and loss aversion.
• The shift towards hybrid investment models, combining AI analytics and human judgment, is expected to accelerate in the near future.