Funding doesn’t turn a bad product into a good one. Yet for too long, the venture world has rewarded inflated hype and charismatic founders over real technical feasibility. Howard Lee Mosbacker, PhD, Co-founder and CEO of Columbus-based Cyrannus, a venture polling platform that provides accredited investors access to expert-evaluated startups, claims it is leading the charge for a smarter, more disciplined approach to early-stage investing—one that prioritizes rigorous analysis and liquidity over blind bets.
With startups becoming increasingly competitive and technical, the industry can no longer afford to throw millions at unproven ideas.
Cyrannus says it is reinventing venture funding by leveraging collective intelligence to evaluate a startup’s investment readiness—ensuring that capital flows toward innovation that actually works.
In short, Theranos never would’ve seen a dime if it had gone through Cyrannus’ due diligence platform (according to the Cyrannus team).
We caught up with Lee to discuss several VC-related developments.
Our conversation with Lee is shared below.
Crowdfund Insider: The venture capital industry has been under scrutiny for many reasons, but what do you think are the biggest challenges facing investors today?
Howard Lee Mosbacker: There are two main problems plaguing venture for investors: rushed assessment of investment opportunities and lack of liquidity.
Firms receive thousands of pitches that cannot be rigorously assessed in a timely fashion, resulting in pattern-matching and network biases to screen opportunities, rather than business fundamentals.
Thus, countless qualified opportunities fall through the cracks of rushed evaluation, and investors receive surface-level information about opportunities that do pass screening without thorough analysis of product feasibility. This increases risk and obscures potential investment opportunities.
In venture, it’s also typical for funds to be locked up for 10-15 years, leaving investors with illiquid assets for extended periods, trapping capital and reducing agility in a fast-paced ecosystem. Decades-long lockups reduce portfolio management and exit strategy flexibility, excluding investors who have high net worths, but lower risk thresholds.
Rushed evaluation of startup pitches, coupled with decades-long lockup agreements, puts VCs in a position of limited flexibility and high-risk investment profiles. However, startup investing doesn’t have to exist this way.
Secondary markets continue to dominate VC exits, making up 71% of exit dollars, and industry disruptors are creating new ways to evaluate startups swiftly and thoroughly with the support of artificial intelligence.
AI has the potential to standardize pitch evaluation to reduce bias and address time constraints associated with reviewing pitches. This enables assessors to provide transparent, thorough analyses to investors and raise the baseline quality of opportunities.
Crowdfund Insider: Many investors follow the lead of top-tier VCs. Does this strategy still work in today’s market?
Howard Lee Mosbacker: In the age of AI, startups are becoming increasingly technical. While VCs are well-versed in investing capital, it is unrealistic that they thoroughly understand the technicalities of every startup that crosses their desks.
High-profile VCs also have a greater risk threshold that grants them the flexibility to be less gamble-averse—a luxury most investors might not have.
Thus, following the lead of high-profile VCs is not a realistic strategy for most investors. VCs often rely on unicorns to make up for losses, but it’s possible to invest in lucrative startups that are not necessarily unicorns. With stable, promising opportunities, investors can compound returns without reliance on unicorns.
To identify promising opportunities, the industry must evolve to include field experts to evaluate startups—especially deep tech startups—to ensure product feasibility and longevity before deals are closed.
For example, the prospect of a startup that aims to transform the bridal industry by streamlining wedding dress shopping via a digital platform would be best evaluated by an expert ingrained in the wedding industry. Experts would evaluate opportunities independently, preventing groupthink and social influence bias.
It is not a failing that VCs don’t thoroughly understand technical ideas, but it is negligent to not involve domain experts in the assessment stage. Field experts safeguard against rushed, misinformed analysis of investment opportunities.
Crowdfund Insider: There’s been a lot of discussion about the lack of liquidity in VC. How big of a problem is this?
Howard Lee Mosbacker: It is standard for capital to be locked up until IPOs are launched or publicly traded companies acquire or merge with a private company. It can take years for a startup to reach this stage, especially as ARR requirements have increased tenfold.
This long game may be sustainable for established VC firms cashing in on older investments, but for newer high-net-worth investors, having capital locked up for 10-15 years before an IPO launch is overly constraining and risky.
This limitation of portfolio agility and flexibility averts trillions of dollars in capital. It would be a missed opportunity to exclude non-traditional high-net-worth investors from venture, like accredited investors and family offices.
In recent years, the tide has begun to change. Secondaries are growing in popularity, surpassing IPO and M&A exits because it is a promising, timelier path to liquidity. Enabling liquidity makes venture more attractive and realistic for nontraditional investors, opening venture to new capital. A trend toward improved liquidity and domain expert evaluation will disrupt venture as we know it—for the better.
Crowdfund Insider: How do you see AI and data analytics changing venture capital?
Howard Lee Mosbacker: Venture’s resource reallocation and network bias predicament make it impossible to thoroughly evaluate startup potential. Far too often, exceptional startups with suboptimal pitches are overlooked for mediocre startups with polished presentations.
AI can address this by supporting the evaluation process as an intelligent filter, screening pitches against objective, established criteria before domain experts weigh in independently. This reduces human resource expenditure by reserving human judgment for quality pitches that pass initial AI screening.
Experts will then receive quality, domain-specific pitches for independent review, eliminating network bias and groupthink. Independent review is a key aspect of this process, as it focuses on business fundamentals over network influences—a method proven effective in academic peer review contexts.
AI can be a powerful tool for process optimization, but AI’s limited reasoning capabilities are not enough to bypass human intelligence and make investment decisions. The objective is not to predict unicorns but to reveal true business potential.
It’s important to strategically leverage artificial and human intelligence to address a venture’s setbacks. Combining domain expertise, independent review and a commitment to assessment quality will transform the evaluation process.
Crowdfund Insider: What’s one thing investors should start doing differently today?
Howard Lee Mosbacker: Leverage the collective intelligence of domain experts to tap into venture! Publicly traded companies are over-saturated and there is significant potential for investors to grow capital before startups reach this stage. However, domain expertise is critical for attracting nontraditional investors.
As mentioned, venture suffers from rushed evaluation of investment opportunities, bias and limited technical knowledge, increasing the likelihood of overlooking market readiness and product feasibility within a business.
When the investment pool is supported by domain expertise, investors will receive transparent and informed assessments of opportunities that will improve confidence in venture. Combined with liquidity through secondary exits, investors can fund promising startups knowing they have the flexibility to exit and diversify portfolios when needed.