Investing in the Data Super­Cycle

What’s in a Name? The Topography of Change & the Data SuperCycle. At DYDX Capital, we think that at any one point, the human condition is largely the sum total of a massive set of optimization problems that can be improved by better data and data analysis. This mirrors the investment opportunity in front of us: to invest in the companies that are using data to better solve problems. We believe that this opportunity is large and that change is accelerating.

Anyone who has done calculus will understand the importance of derivatives and the formula f’(x) = ∂y/∂x or the rate of change given f(x) = y.

Venture Capital relies on massive rates of change – always striving for a bigger and bigger ∂y (or change in value created- DY) over a constant period of time (DX). To achieve a large DY, and create a game-changing product, often a complex optimization problem has to be solved. In turn this optimization is dependent on the size and quality of the data set being used to create answers. You can imagine any solution set as a function of it’s underlying data. Like an ever-expanding topographical map, the larger the data set the better the maxima (optimizations) that can be found. It is the ability to capture, analyze and iterate on data that underlies many of the breakthrough products and services that venture capital has helped support. This holds true across verticals –hi-tech, software security, healthcare, industrial – and often a data driven solution transcends the vertical within which it is first deployed. At DYDX Capital, we search for these opportunities and we believe that we have entered a new era of data capture and analysis which has created a Data SuperCycle, turbocharging the number of solutions to large expensive problems.

What is the Data SuperCycle?