Union Square Ventures and Sequoia Capital most frequently got into their largest exits early.

In venture capital, not all companies are created equal. In reality, venture returns are best understood as a power law distribution, as highlighted below, in which a firm’s best investments can return more money than the rest of a portfolio combined.

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Of course, being a named investor in a unicorn exit is not the only important thing. When you got in, i.e. how early you invested is clearly important.

Using CB Insights data, we highlighted and analyzed the 5 largest exits since 2009 of 12 of the top venture firms as identified by our tech unicorn VC analysis.  The VC firms in that analysis and hence, this analysis, are:

  1. Accel Partners
  2. Andreessen Horowitz
  3. Battery Ventures
  4. Benchmark Capital
  5. Bessemer Venture Partners
  6. Charles River Ventures
  7. Greylock Partners
  8. Kleiner Perkins
  9. New Enterprise Associates
  10. Redpoint Ventures
  11. Sequoia Capital
  12. Union Square Ventures

The data below.

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Facebook, Groupon, Twitter most prominent

Over the period, Facebook, Groupon and Twitter make up 9 of the 12 venture firms’ biggest exits by valuation at the time of exit. Twitter is the largest exit of Union Square Ventures, Benchmark and Charles River Ventures (see note below), respectively, while Facebook is the largest by sheer size of four firms including early investor Accel and later investors Kleiner Perkins and Greylock.

Of note, none of the 12 firms’ 5 largest exits came from an enterprise-only facing startup – highlighting the fact that while enterprise tech companies may make up more of the largest exits by number, consumer tech companies dominate the exit valuation side of the spectrum. It’s also worth noting that while several of the firms’ IPO exits that don’t make it on the list have risen immensely in value since (as highlighted by exits like Bessemer-backed Cornerstone OnDemand which has had a fantastic post IPO performance), others that do like Groupon and Millennial Media have since flopped in the public markets.

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Union Square, Sequoia pick early and often

“For me, the firms who invested in the Seed and Series A rounds of $1bn+ exits is the only list I care about. That is what is exceedingly difficult. Piling into the expansion rounds of an acknowledged market leader is pretty easy if you are willing to pay up.”

The above comment was made by Fred Wilson who commented on the findings from the Exceedingly Rare Unicorn VC analysis. And his point is spot on. The biggest gains in venture accrue to investors who got in earliest (and who maintain ownership over time).

When we peel back the stage of first investment for each of the 12 VC firms’ biggest exits since 2009, it is Union Square Ventures who stands out for its ability to get in early, investing in all of their five largest exits including Twitter, Tumblr and Zynga at the early-stage (seed/Series A).

Other prescient early pickers include Sequoia Capital, which picked four of its five largest exits over the period (all valued over $2B at the time of exit) at the Series A stage or earlier. Charles River Ventures also counted four first investment at the early-stage, though its worth mentioning that the firm did not re-up in its biggest exit, Twitter, after participating in its seed round.

Conversely, while Kleiner Perkins has been known for its ability to see around the corner for the next big thing, four of the venture firm’s five largest exits by valuation over the period were mid or later-stage investments. The storied firm, however, has seen its share of notable exits in the past six months including Nest, Opower and Mandiant and counts a very robust Tech IPO Pipeline.

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Methodology/Notes

For companies that exited via M&A, the valuation is simply the amount that the company got acquired for. For a company that went public, the exit valuation was that on the day of the IPO.

The time period covered ranges from January 1, 2009 to June 2, 2014

Early Accel investment Supercell was omitted as none of its investors were said to be fully exiting the company when Softbank took a majority stake in the company.

All of the underlying exit and investor data used in this research brief is from the CB Insights Venture Capital Database.  Sign up for free below or click here to learn more about Investor Mosaic.