Venture Capital Firms: 

Small businesses are the backbone of America’s economy and venture capitalists make small business success possible. Unfortunately, significant percentages of VC-backed startups fail, costing the industry traumatic amounts of money each year. No firm ever invested capital in a startup they expected to fail. Despite carefully considering in-depth market research, financial analyses, technical models, and forecasts, venture capitalists are still blindsided by spectacular failures. With capital scarce, the stakes remain incredibly high.

Outside of rigorous quantitative modeling is a variable common to every small business your firm is evaluating: humans. You aren't investing in numbers, balance sheets, or market research. As a venture capitalist, you are ultimately investing in people and your relationships with them. People are far more difficult to assess than business plans and revenue potential, and as the evidence proves, people lie. In your final phases of due diligence let us help you make those human assessments and remove deception as a factor.

The Culper Group will participate in interviews and investigations with potential capital recipients, as well as analyze previous disclosures, including written statements, meetings transcripts, and emails, in order to identify deceptive indicators. Our analysis product will provide you with a probability based assessment that will confirm your confidence or provide you with insights into specific areas of deception, including omission and withholding behaviors.

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Hedge Funds and Investment Firms:

Fraud is rampant in the business world, leading to direct costs of around 7% to the US economy. For financial professionals risk control efforts generally rely on quantitative modeling and financial evaluation. Despite overwhelming technical expertise when it comes to investment analysis, firms can still make poor choices. When every advantage counts, overlooking the qualitative nature of corporate communications can be costly. Money motivates fraud. Fraud is rooted in deception. Luckily, to the trained eye, corporate communications can reveal markers of deception, decreasing susceptibility to fraud.

How did analysts miss Jeff Skilling’s now-famous hostile response to an investor inquiry? What did Encarna’s 2013 conference call tell us about that company, and its share price decline shortly after?

Qualitative evaluations of corporate communications, from scripted earnings reports to conference calls to email traffic, can give hedge fund managers and investment professionals added analytical value. The Culper Group works with your firm, using our science-based proprietary methodology, to assess the degree to which companies are withholding, omitting, or outright deceiving. Our easy-to-read analytical product gives you the bottom line up front, provides insights and explanations of any troubling areas, and offers suggestions for further inquiry and investigation.  

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