Crunchbase transforms AI forecasting engine: 95% accuracy leads new investment trends

Crunchbase announced it will abandon its role as a historical data provider and transform into an artificial intelligence (AI)-driven prediction engine. The new platform will be able to predict startup financing rounds, acquisitions and growth trajectories with an accuracy of up to 95%, marking a major shift in Crunchbase’s strategy.

Crunchbase CEO Jagger McConnell said in an interview that the traditional historical data industry has declining. He believes that if data companies rely solely on historical data, they will face huge challenges in the future. He noted that AI systems can easily process and analyze historical information, thus threatening the survival of these data companies.

This transformation allows Crunchbase to better utilize its massive data set. The company extracts data from the usage patterns of 80 million active users, combines information from public sources to predict future business events. Meh Gautam, chief product officer at Crunchbase, said the accuracy of the forecast is due to a diverse data source, and AI is able to analyze thousands of signals to predict key events such as financing, acquisitions and company growth.

Crunchbase claims its financing forecasts achieve 95% accuracy and 99% recall in the backtest, meaning it correctly identifies most of the companies that will receive financing. Although the prediction accuracy for the 12-month period is slightly lower, it remains around 70%. In addition, Crunchbase's AI can also predict acquisitions, initial public offerings (IPOs), company growth, and even potential layoffs. It is worth noting that certain negative forecasts will not be made public to avoid harm to the company.

McConnell expects traditional data companies to face an existential crisis in the next five years. He believes that investors are increasingly eager to obtain predictive signals, rather than relying solely on historical data. Crunchbase’s goal is to be a platform that can drive AI-driven investment decisions, which may include automated investment systems and index tracking in the private equity sector.

Industry analysts noted that while investors remain skeptical about a fully automated investment approach, Crunchbase’s success may rely on it maintaining high forecast accuracy during the scaling process while convincing customers to trust their AI-generated insights. McConnell stressed that Crunchbase wants to enhance rather than replace human decision-making, investment is still subjective, and investment philosophy and price must match.

The new platform has been officially launched today and users can access it through Crunchbase.ai. McConnell believes that future competition lies in predictive capabilities, not in the amount of data.