Bloomberg Beta, the venture capital wing of Bloomberg LP has been working with data research startup, Mattermark to take predictive analytics to the next level.

By using an algorithm that they’ve been working on for over a year now, they will try to spot entrepreneurs before they start a company.

Head of venture capital firm Bloomberg Beta, Roy Bahat, explains about the intriguing idea of finding future entrepreneurs, “There are so many companies being started and so many people trying to back those companies that if you don’t start earlier, sometimes you feel like you’re speaking to somebody after they’re already well on their way.”

James Cham and Bahat along with their partner in New York, Karin Klein, met up with the team at Mattermark headed by CEO & Cofounder, Danielle Morrill with the idea to use big data, machine learning, and public sources of data to answer the following question: Who are the people who have not yet started a venture-backed company, who are most likely to start one?

The study of potential founders was carried out with more than 1.5 million professionals connected to technology startups in New York and Silicon Valley. The study evaluated leading indicators of future venture-backed founders at very large scale, considering factors like education, previous employers, seniority level, role within a company, geography and age.

The 350 top-ranked members of this group, the Future Founders received, a message in March from Bloomberg Beta inviting them to private events in either New York or San Francisco. NPR reported that some candidates didn’t respond to the invite while others who got convinced did show up, some of them well on their way to become successful within a few months from the study.

However, Morrill points out, an individual in this group has only a 0.66% chance of starting a company. “While we believe the future founders group has a 17% chance — 25x higher — that’s still going to be the minority of members of the group.”

“Some results ran counter to commonly-held thinking about founders, but other patterns revealed that conventional wisdom can be stronger than just a hunch. For example, the most predictive bucket of future founders were Stanford graduates with Computer Sciences degrees who are currently working (but not founders of) a venture-backed startup,” she added.

The study revealed some surprising facts:

  • 38% of venture-backed founders are over 40 years old
  • Only 15% of venture-backed founders have a Computer Science degree
  • Management consultants are more than 2x more likely to be venture-backed founders than engineers
  • 43% of venture backed founders worked at a venture-backed company immediately before founding
  • Two thirds of venture-backed founders were not in a senior leadership position prior to founding
  • Contrary to conventional wisdom, being “stuck” in the same company or position for a long time (even a decade) does not diminish your likelihood of becoming a founder

However, the algorithm’s predictions “don’t take into account free will.” Morrill quips that, “Starting a company is all about breaking the pattern, so following our pattern is only a great way to find some of the most interesting future founders.”

Read more here.

(Image credit: BloombergBETA)

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