Founded in 2012, Palo Alto Venture Science provides seed-stage financing and adopts a rational approach in investing using data, models and stochastic theories.

The fund invests in innovative companies focusing on building technology that works across the web, mobile devices and the new wave of emerging smart devices in a manner to disrupt existing industries, create new markets and tackle significant problems with a global application.

The fund’s objective is to achieve a superior rate of return for its investors by following systematic approach to investing and applying proprietary analytical models. The fund uses models that are built on proven concepts such as the Modern Portfolio Theory, Sharpe Ratio, Kelly Criterion and Multi Factor Risk Models. Models will be used extensively for evaluating and selecting portfolio companies and optimizing investment size per company, per stage vis-a-vis the overall fund size.

The firm's funds are formed based on a three tenets: bias-free selection, calculated deployment, and avoiding early mistakes.

1. Cognitive biases are toxic when it comes to making investment decisions. That's why the firm evaluates startups for their merits in terms of technology and business.

2. Instead of deploying capital arbitrarily from deal to deal as it's been done traditionally, complex stochastic calculations are performed to determine cheque sizes, re-up levels and dry powder similar to the way it's done at legendary funds such as PIMCO and Berkshire Hathaway.

3. Avoiding early mistakes is key in VC. Most managers deploy capital too quickly in the beginning that leaves very little room for mistakes later. This is why the term "chasing homeruns" or "seeking unicorns" are commonly heard in discussions regarding fund returns. To avoid early mistakes, they have built bias-free multi-factor selection models such as the one they used to evaluate Y-Combinator's Summer 2014 graduating class.

Notable investments include: Appetas (restaurant marketing platform, acquired by Google), Olapic (photo integration tech platform), Safe-Guard (vehicle protection, acquired by Goldman Sachs) and Zipmark (cheque software).