Analyzing the Investment Syndicates of Micro VC Funds Felicis Ventures and Floodgate Fund

Seed and early-stage investing in technology continues to grow largely unabated as the result of (1) large multi-stage funds including Andreessen Horowitz and NEA who are increasing their seed activity and (2) a relatively new but fast-growing class of “micro VC” funds (<$100-$150M assets under management with many being <$40M). Add in the impact of crowdfunding via things like AngelList syndicates and the growth in early stage investing will likely continue and probably accelerate.

Dan Primack of Fortune had asked if there was too much money chasing too many deals and at the micro-VC level, that does appear to be the case suggesting an eventual Seed VC fund shakeout. But as with the venture industry overall where returns follow a power law, a handful of micro-VC funds will likely see the majority of returns.

Felicis Ventures and the Floodgate Fund appear to be two of the more promising micro-venture funds based on initial successes.

Both are among the top 10 seed investors based on their portfolio companies rates of receiving follow-on investment. And both investors have scored some big exits. Felicis was an investor in The Climate Corp which was recently acquired by Monsanto for $930M. They also were an early investor in Meraki which Cisco Systems acquired for a reported $1.2 billion. Floodgate was an investor in Yume which went public in August (Felicis was also an investor) and also was a backer of Demandforce which Intuit acquired for $423.5M.

Given the importance of network centrality (connectedness to high quality investors) to VC performance, we analyzed the investor syndicate relationships of these two firms to understand which investors they tend to co-invest with and which VCs most frequently follow-on in their investments.

(Note: This data and these visualizations comes directly from the interactive Investment Syndicate visualization on every investor profile on CB Insights.)

Felicis Ventures Investment Syndicate Trends

With over 25 co-investments to date, SV Angel is Felicis Ventures’ most frequent co-investor. In fact, 2/3rds of SV Angel’s co-investments with Felicis have come at the seed-stage including Pickwick & Weller and funding platforms Crowdtilt and FundersClub. And as the YoY trend line shows, its syndication with SV Angel has grown over the past few years, with a large number of its co-investments coming in 2012.

First Round Capital and 500 Startups round out the top 3 syndicate partners. Two mega venture funds, Greylock Partners and Andreessen Horowitz also share 10+ deals with Felicis Ventures. 50% of A16Z’s co-investments with Felicis have been at the seed-stage.

Peeling back the firms who invest after Felicis invests in a deal highlights two of venture’s more prominent and storied firms: Accel Partners and Sequoia Capital. Both invest in many deals after Felicis invests as can be seen below. In addition, both Accel and Sequoia co-invest in the same rounds with Felicis in addition to following-on. Accel Partners, for example, has participated with and/or followed on to investments by Felicis including Dropcam, Bonobos and YuMe. Sequoia Capital has invested after Felicis in several companies including Cisco-acquired Meraki and Ed Tech gaming startup Mindsnacks.

Floodgate Fund Investment Syndicate Trends

Because of its size, Floodgate has stated that is focused on just two markets, the San Francisco Bay Area and Austin, Texas. As a result, one unsurprising trend trend that is noticeable from Floodgate’s syndicate is that when the firm does do deals in Austin, it syndicates them with Austin, Texas-based investors. As shown below, Austin Ventures and Silverton Partners have each co-invested with Floodgate in a number of deals. Three investors have completed over 15 deals with Floodgate, and all three of the firms are also micro VCs: First Round Capital, Baseline Ventures and SV Angel.

Who tends to follow-on after Floodgate’s early-stage deals? Kleiner Perkins Caufield & Byers which invested in early Floodgate portfolio cos Chegg (which recently filed for IPO) and Aggregate Knowledge sits at the top with Khosla Ventures which has also invested in a few Floodgate companies including PayNearMe and Okta. The top 5 investors by participation in deals after Floodgate are below.