SignalFire raises over $1B as LPs embrace data-driven investing

Summary

Thirteen years ago, when Chris Farmer founded early-stage venture firm SignalFire with data analysis at the core of its investment strategy, many were skeptical about the approach — conventional wisdom dictated that nascent companies didn’t have enough data to make investment algorithms effective. “This was a very radical idea, and everyone thought I was crazy,” Farmer (pictured above, on the right, alongside CTO and partner Ilya Kirnos) told TechCrunch. A lot has changed since SignalFire raised its first $53 million fund 2015. Today, more venture firms are adopting data-driven strategies in addition to, or sometimes even instead of, traditional VC methods that often rely on networking. Indeed, several venture firms today claim they use AI to source deals, and we even have some private markets-focused companies that sell analytical tools to help all kinds of investors to do “qualitative diligence.” Still, Farmer feels SignalFire’s approach is unique because, unlike other VCs that use data, his firm integrates AI into every aspect of the investing process — from identifying promising early-stage startups to helping portfolio companies with recruiting and product marketing. And its limited partners seem to agree that its investment methods will continue to hone its edge. On Monday, SignalFire said that it has secured more than $1 billion in fresh capital, bringing its total assets under management to about $3 billion. This is the firm’s largest funding haul ever, exceeding the $900 million it raised two years ago. At a time when many venture firms have been forced to cut back their fund sizes, Farmer says raising such a large fund means that SignalFire is “well out of the proof-of-concept phase and into the established manager phase.” The firm’s new LPs include giant pension plans, insurable banks, and an Asian sovereign, Farmer said. Indeed, CalPERS, the largest pension fund in the U.S., has reportedly committed $100 million to SignalFire for the first time. Accordin...