Fishing For Deals? This A.I.-Powered Investment ‘Dating’ App Will Hook You Up
There’s plenty of fish, er, funds in the sea
PHOTO CREDIT: Getty Images
When it comes to finding love or money (read: venture capital), one rule holds true: Date first before you get hitched.
Be it in the traditional world of banking and investment, or the nebulous business of finding a life partner, there’s a need to dish out time, effort, and, ironically enough, incur a lot of expenses before making that commitment. If you’re lucky, you seal the deal on the first try. Otherwise: wash, rinse, repeat.
Fortunately, the advent of technology is managing to pare down the time and effort it takes to go through the entire process. And while in romance this can be a double-edged sword, when it comes to investment deals, it’s making a sector that’s largely predicated on human capital less costly and more efficient.
Cutting to the chase
BankerBay, a deal-matching platform that connects institutional investors with corporate deals, was founded by Romesh Jayawickrama when he realized, after working for several investment banks and running his own boutique investment advisory firm, that the amount of work was the same whether it was churned out by a five-man team or a 500-strong workforce.
“The investment industry as a whole is 100% deal origination. It’s grounded on human capital,” relates Jayawickrama, pointing out that if 65% of that human capital were cut off from the industry — which is essentially what happened during the great recession of 2008 to 2013 (and prior economic cycles) — “there will be a significant gap.”
It used to be that such setback was addressed by recurring human capital-centric solutions, i.e. firing half the staff during a trough and hiring them back when things stabilize, but Jayawickrama avers that, today, such systemic problem calls for a technology-based solution.
Enter BankerBay. The deal origination platform connects qualified corporate seekers of capital to institutional providers of capital—wherever in the world they may be.
Powered by an algorithm engine, BankerBay essentially profiles hundreds and thousands of sell-side deals according to 25 key criteria. “It’s very much like a match.com or e-harmony for bankers. Only we do the matching in a more sophisticated way,” informs Jayawickrama.
BankerBay evaluates everything from the basics — like geography, a sector, a sub-sector — and all the way into more critical data like financials—minimum revenue, minimum EBITDA, gearing rations, et cetera. “Our algo engine matches these criteria together, outputting thousands of permutations, and we have a scoring system between zero to 100 percent. A correlation of 85 percent and above is considered a worthy match,” says Jayawickrama.
More nuanced matches
On top of the static criteria sheet, deal generation is further refined within the BankerBay platform using artificial intelligence (AI). A user keen on investing in fast-moving consumer goods (FMCG) companies, for example, can theoretically invest in any FMCG-type company via BankerBay. But with AI embedded in the system, and a team of transaction management analysts, a user’s pattern of behavior within the platform and website leads to a more nuanced match.
“If we see that you’re only engaging in luxury goods companies, and the articles you read in our site are on the luxury end of things, we pick up on these interests and further refine your criteria for investment,” says Jayawickrama.
The platform essentially replicates what a banker would do over many months to mine data and establish good business relationships: building trust with a client, taking them out to lunches, playing golf, flying to corporate headquarters. The big difference? These deals, which used to cost millions of dollars of man hours to establish, happen in a matter of milliseconds.
And yet, there remains the fact that in a sector as conservative as investment, technology-centric companies like BankerBay are always met with a steady stream of resistance. Back in 2014, it took a while to convince the sector that BankerBay was not trying to take over bankers’ jobs, and instead was an effective tool to add to their arsenal.
“We were met with a lot of denial and defensiveness,” recounts Jayawickrama. “Investment has very much been an old boys network, and it hasn’t changed much for a very, very long time. It was about people—and the view was that technology, which is faceless and emotionless, can never replace that.”
It seems the tides have turned in BankerBay’s favor since the summer of 2014. From getting about 20 deals from around the world submitted every month, of which the aggregate value totaled to approximately $100 million, last November 2017 alone saw the platform getting over 700 deals totaling $32 billion.
“As a banker/corporate/institutional investor, if you plug into BankerBay right now, you will, in theory, have access to almost 5,000 live deals from 145 countries around the world. And with our technology, as well as the level of attention we do to curate every single deal that goes into the platform, these are assuredly quality deals,” ends Jayawickrama.