{"id":337593,"date":"2017-04-05T01:14:39","date_gmt":"2017-04-04T17:14:39","guid":{"rendered":"http:\/\/techcrunch.com\/?p=1472137"},"modified":"2017-04-05T01:14:39","modified_gmt":"2017-04-04T17:14:39","slug":"this-new-sentiment-index-aims-to-help-founders-time-their-fundraising","status":"publish","type":"post","link":"https:\/\/people.utm.my\/asmawisham\/this-new-sentiment-index-aims-to-help-founders-time-their-fundraising\/","title":{"rendered":"This new sentiment index aims to help founders time their fundraising"},"content":{"rendered":"

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A new index<\/a> aims to help consumer-oriented startup founders understand the health of the venture capital fundraising environment, and specifically when is a good time to seek funding \u2014 and when isn\u2019t.<\/p>\n

How does it work? Created by the early-stage venture firm Goodwater Capital<\/a>, the index starts by analyzing a trove of publicly available information, from the aggregate dollars raised by U.S.-based consumer tech startups during the current\u00a0month, to related monthly M&A activity, to the amount of money VCs have\u00a0raised in the previous year, to the amount of money they\u2019ve invested in startups over the\u00a0previous quarter. It also factors in the\u00a0median price-to-earnings\u00a0ratio of top public U.S. consumer tech companies\u00a0during the current month.<\/p>\n

Not each is weighted equally, says the firm\u2019s lead data scientist, Jimmy Li. Instead, the firm factored in historical sentiment over the last 20 years, creating a regression analysis using those five buckets to understand which variables matter the most over time. \u201cIt\u2019s no one thing,\u201d says Li.\u00a0\u201cIn fact, the thing that most people see \u2014 deal volume \u2014 is a lagging indicator, not a leading indicator.\u201d<\/p>\n

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Goodwater was founded in 2014 by Eric Kim, a former investor with Maverick Capital<\/a>, who launched the consumer-tech focused firm with his former Stanford MBA classmate \u2014 and former Accel Partners and Kleiner Perkins Caufield & Byers investor \u2014\u00a0Chi-Hua Chien in 2014.<\/p>\n

The firm has been working to differentiate itself through a series of tools that outsiders might find useful, including, last month, by publishing a detailed equity report<\/a> about Snap prior to its IPO.<\/p>\n

As\u00a0for motivated the firm to create this index, Chien says he sees the\u00a0lack of\u00a0transparency into private market investor sentiment as a\u00a0\u201ccore market problem\u201d that\u00a0the firm was capable of addressing, with Li\u2019s help.<\/p>\n

\u201cWhen it comes to the public market,\u201d says Chien, \u201cyou can pull up any index, and at a glance, know how investors are feeling in a particular geography or about a particular industry. If market caps are rising, they\u2019re bullish; if they\u2019re falling, they\u2019re bearish.\u201d<\/p>\n

It\u2019s not nearly so easy in the comparatively opaque world of startups, where VCs are largely relying on data points within their own portfolios, and founders are dependent on the funding announcements they see, along with the anecdotes they hear at networking events.<\/p>\n

Maybe Goodwater\u2019s index can help change that, giving VCs and founders a better pulse on the wider world around them. Certainly, it\u2019s a fun tool to play around with, as we discovered for ourselves yesterday. You can check it out for yourself here<\/a>.\u00a0Note that Goodwater will be updating\u00a0the index monthly.<\/p>\n

Featured Image: PM Images\/Digital Vision\/Getty Images<\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

\"\" A new index aims to help consumer-oriented startup founders understand the health of the venture capital fundraising environment, and specifically when is a good time to seek funding — and when isn’t. How does it work? Created by the early-stage venture firm Goodwater Capital, the index starts by analyzing a trove of publicly available information, from the aggregate dollars raised… Read More<\/a><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n

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