I hired a new investment analyst! He’s hardworking, detail-oriented and works around the clock. For free.
His name is GPT-4.
This week, GPT-4 and I have been investing together. We passed on a bunch of companies but we did find one winner!
Let’s look at two companies we reviewed this week…
Company #1
Company #1 is a generative AI company.
It has an interesting concept and a few paying customers, but the details were sketchy and it seemed a little too early for me. I like to see companies at $200-500k ARR before investing.
The valuation is a very reasonable $8 million post-money.
Nonetheless, my decision was pass. But let’s see what GPT-4 thinks…
I prompted GPT-4 by telling it that it was the world’s best angel investor. I often like to assign it an identity so that it will act accordingly.
Next, I explained that I would be feeding it a deal memo.
Let’s see what it says!
It hallucinated some very prestigious backgrounds for our founders! Hey, what founder doesn’t need a little extra credit, right?
But it got the other details dead on.
So what’s your decision, GPT-4?
GPT-4 didn’t give us a decision, only a bunch more questions. Just like a real VC!
I’m so proud!
But let’s force his hand by explaining that this is all the information we have:
GPT-4 is a pass. And for the same reasons.
This deal memo was very short on specifics. It said the company had a few paying customers, but never provided any numbers.
Given that they only have a few customers and just graduated from an accelerator, I’m guessing revenue is minimal. It might be a couple thousand a month at best.
I could chase down the exact numbers. But if I spent all day pestering founders for specifics, I’d never sleep.
GPT-4 may not need it, but I do!
In some cases, I do ask for these specifics. But I didn’t see anything compelling enough here to warrant it.
Company #2
Company #2 is a really cool marketplace that uses AI in an innovative way. It has strong traction, growing revenue revenue rapidly month over month.
It’s also operating in a huge market. The founder is very ambitious and has founded several companies in the past.
Valuation is also reasonable.
I’m in! But before we sign and wire, let’s see what GPT-4 thinks…
This deal memo was very detailed and much longer. Given GPT-4’s character limit on prompts, I had to enter it in a few prompts.
GPT-4 understood it perfectly and gave some interesting results:
GPT-4 is in! And for some of the same reasons.
Traction is strong. The team has very relevant experience and a clear plan to dominate their market.
With my new analyst’s confirmation, I requested an allocation!
Time to Give My New Employee a Performance Review
GPT-4 really impressed me in its ability to digest data on companies and draw sophisticated conclusions.
It spotted a profound lack of information on Company #1. And in Company #2, it identified the strong traction, big market, and great team that makes a winning bet.
Best of all, it had the guts to commit right away when it saw something special. Maybe it really is the world’s greatest angel investor!
Any mistakes it made were minor.
It hallucinated some team educational backgrounds, but it got almost every other detail right. And in any case, I don’t really care where or if people went to school.
GPT-4 is an amazing tool for individual angels. Most of us can’t afford to hire a team! And it’s great to have someone to check your thinking against.
But even if I had a huge staff, I’d still augment them with GPT-4. Just as in chess, I think the best investing will be done not by AI or by humans, but by humans and AI working together.
GPT-4 had a great first week! I can’t wait to unleash him on more startups on Monday.
Have a great weekend everyone!
If you enjoyed this post, subscribe for more like this!
More on tech:
So, How’s That Angel Investing Thing Going?
What Can Angels Learn from Warren Buffett?
Save Money on Stuff I Use:
This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.
More on Fundrise in this post.
If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!
I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!
I wrote a detailed review of Misfits here.
Use this link to sign up and you’ll save $15 on your first order.
Tremendous 
Leave a comment