MorphAIs is a new VC out of Berlin, aiming to leverage AI algorithms to boost its investment decisions in early-stage startups. But there’s a catch: it hasn’t raised a fund yet.
The firm was founded by Eva-Valérie Gfrerer, who was previously head of growth marketing at fintech startup OptioPay; her background is in behavioural science and advanced information systems.
Gfrerer says she started MorphAIs to be a tech company, using AI to assess venture investments and then selling that as a service. But after a while, she realized the platform could be applied as an in-house fund, hence the drive to now raise a fund.
MorphAIs has already received financing from some serial entrepreneurs, including: Max Laemmle, CEO & founder of Fraugster, previously of Better Payment and SumUp; Marc-Alexander Christ, co-founder of SumUp, previously of Groupon (CityDeal) and JP Morgan Chase; Charles Fraenkl, CEO of SmartFrog, previously CEO at Gigaset and AOL; and Andreas Winiarski, chairman & founder of awesome capital Group.
She says: “It’s been decades since there has been any meaningful innovation in the processes by which venture capital is allocated. We have built technology to re-invent those processes and push the industry towards more accurate allocation of capital and a less-biased and more inclusive start-up ecosystem.”
She points out that over 80% of early-stage VC funds don’t deliver the minimum expected return rate to their investors. This is true, but admittedly, the VC industry is almost built to throw a lot of money away, in the hope that it will pick the winner that makes up for all the losses.
She now plans to aim for a pre-seed/seed fund, backed by a team consisting of machine learning scientists, mathematicians and behavioral scientists, and claims that MorphAIs is modeling consistent 16x return rates, after running real-time predictions based on market data.
Her co-founder is Jan Saputra Müller, CTO and co-founder, who co-founded and served as CTO for several machine learning companies, including askby.ai.
There’s one problem: Gfrerer’s approach is not unique. For instance, London-based InReach Ventures has made a big play of using data to hunt down startups. And every other VC in Europe does something similar, more or less.
Will Gfrerer manage to pull off something spectacular? We shall have to wait and find out.