Ryan Caldbeck – Quant in Private Markets - [Invest Like the Best, EP.110]

Episode Summary

Executive Summary: Patrick O'Shaughnessy interviews Ryan Kaldbeck of CircleUp about Helio, an AI-driven sourcing and underwriting system for early-stage consumer brands. The episode explains how private-market quant can predict success using alternative data, why consumer is a better fit than tech, and how data can make private investing more scalable and transparent.

Main Topics: Helio’s origin and evolution: Helio began as a way to automate manual company screening and evolved into a full sourcing and prediction engine. Why consumer is the right quant target: Consumer has repeatable business models and abundant data, making it more model-friendly than tech. Predictive factors for success: Distribution, brand, and product uniqueness emerged as the strongest drivers of revenue growth. Private-market friction and relationship selling: Even with data, deal execution remains relationship-driven, inefficient, and far less scalable than public markets. Valuation discipline and mispricing: CircleUp uses revenue multiples plus growth context to avoid overpaying for good companies. Limits, challenges, and future expansion: Talent, LP skepticism, and category fit constrain the model, but adjacent areas like real estate may work. Values, goals, and leadership: Kaldbeck emphasizes integrity, perseverance, solution-oriented behavior, and long-term mission focus.

Key Arguments: Helio works because consumer has repeatable models and lots of data; tech is too heterogeneous and crowded. Revenue growth became the objective measure after exit data proved too sparse and noisy in private markets. Distribution breadth/quality, brand intensity, and product uniqueness are the main predictive buckets. Offline distribution matters more than many tech VCs think; DTC is useful for testing, harder for scaling. Velocity (units/store/week) was not predictive across tens of thousands of companies, despite common belief. CircleUp prices mostly on revenue multiples adjusted for growth and category context, not on pure instinct. Quant private investing is scalable in consumer/real estate, but tech remains hard because winners are too unique and competitive. The biggest business risks are talent retention and convincing LPs with limited backtestability in private markets.

Data Points: Companies tracked by Helio: about 1.4 million - Current scale of CircleUp's consumer and retail company database Screening load in early PE job: 400 or 500 companies a week - The manual process that inspired automation Classifier predictive data: eight of the 10 pieces of information - Most predictive inputs were data CircleUp didn't need to ask for Consumer VC funds: 750 BC firms - Patrick cites the crowded early-stage tech VC market Early-stage consumer funds: aren't 10, 15 in the country - Kaldbeck argues consumer is less crowded than tech Company size focus: $1 to $15 million revenue companies - CircleUp's target range for Helio analysis Halo Top claims: 12.5? - No exact number stated; package simplification and growth discussed

Pivotal Quotes: "A monkey could do this. A monkey could do this churned into a computer could do this." — Ryan Kaldbeck: Describing the repetitive manual screening work that led him to automation "We're trying to transform that as Tesla has done or as Apple has done in terms of buying a car or a computer." — Ryan Kaldbeck: Explaining CircleUp's goal to make private-market pricing feel transparent and fair "Offline matters a lot more than they think it does." — Ryan Kaldbeck: His view that retail distribution remains more important than many DTC-focused investors assume

Implications: The model may expand beyond consumer, but its next step depends on proving repeatable returns, building trust with LPs, and preserving proprietary data advantage.