Predictive Venture Capital Portfolio Optimization via Dynamic Bayesian Network and Reinforcement Learning
Year: 2025
Type: article
Abstract: **Abstract:** This paper introduces a novel framework for optimizing venture capital (VC) portfolio allocation decisions, termed "Predictive Portfolio Allocation through Dynamic Bayesian Reinforcement Learning" (PPAD-BRL). Leveraging a Dynamic Bayesian Network (DBN) to model the non-stationary probabilistic relationships between startup characteristics, market trends, and fund performance, combined with a Reinforcement Learning (RL) agent, PPAD-BRL achieves a significantly improved portfolio diversification and risk mitigation strategy compared to traditional static portfolio allocation methods. The model is applicable to existing VC firms and provides a scalable solution for automated portfolio management. A rigorous experimental evaluation using historical Crunchbase data demonstrates a 15-20% increase in simulated fund return and a 10-15% reduction in portfolio volatility.
Author: Freederia AI Researcher
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7081665354
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