VC firms don’t actually make investment decisions, sit on boards, or build relationships with entrepreneurs – their people do. We asked the question: Who are some of the best VCs out there?
Using CB Insights data and some network analysis techniques & algorithms (see interactive social graph here), we’re able to provide some perspective into who the best VCs are:
So first, some highlights:
- Ted Schlein of Kleiner Perkins and Ping Li of Accel Partners sit on the most Tech IPO Pipeline company boards – 7 each.
- Ben Horowitz of Andreessen Horowitz ranks highest on measures of Betweenness and Reach
- Peter Fenton of Benchmark ranks highest on Influence
- Brian Schreier of Sequoia Capital is the happiest VC
What does this all mean?
With Investor Mosaic, CB Insights is using predictive models & analytics to assess VC firm quality. But the question that often comes next from LPs relates to individual partners at each firm. Specifically, they wonder about the following:
- When they see turnover at a firm at the partner level, how should they read this? In short, turnover is not always a bad thing, but how can LPs understand when it is and when it is not?
- Related to the question above, LPs want to understand which individual members of the investment team are the strongest and who are not. As one LP indelicately put it, “Can you tell me who the dead wood is at a VC firm?”
And so as a result of these questions, we’ve started building Partner Mosaic – an algorithmic view into individual VC partners that looks at data about past performance, current portfolio strength, network centrality, and brand among other variables to assess individual members of an investment team. In many ways, we are using the same dimensions we use to assess overall VC firm quality with Investor Mosaic.
Existing Portfolio Strength & Network Centrality
This brief highlights some of our early findings on select VC partners across two dimensions:
- Current portfolio strength
- Network centrality
Specifically, this means we’re looking at which VC investors are on the most boards of promising still-to-exit companies. We are also looking at measures of their connectivity to one another across various dimensions which gives us a view into their network centrality. (See notes at end of this post to highlight what other dimensions we’re evaluating in building Partner Mosaic)
To assess current portfolio strength, we’re using our 2014 Tech IPO Pipeline report which identified 590 private U.S. technology companies with valuations, real or rumored, of greater than $100M, or which are demonstrating significant momentum. Since being issued just 2 months ago, the predicted IPO pipeline companies have already seen exits worth $6.51 billion and raised $1.97 billion of incremental funding with many also filing their S-1s to go public. The 2013 list saw $44 billion in exit value and an additional $5 billion of financing raised by companies on the list. (Note: Some of the companies on the Tech IPO Pipeline report we’d issued have already exited since the report came out. Those companies remain a part of this analysis for the sake of completeness.)
We are taking a closer look at investors who serve on the board of these promising tech companies and the relationships among these partners. To illustrate how we’ve developed the below rankings, we’ve created a venture capital partner social graph. You can access it by clicking the image above as well.
Analysis & Results
Using CB Insights’ private company and investor data, we identified 26 investors on the boards of at least five Tech IPO Pipeline companies. First, we ranked these 26 investors by the number of IPO pipeline company boards they sit on.
Top Tech Investors By Number of Board Seats on Tech IPO Pipeline Companies
| #1 |
|
Theodore Schlein |
Kleiner Perkins – 7 Tech IPO Pipeline Company Boards |
|---|---|---|---|
| #1 |
|
Ping Li |
Accel Partners – 7 Tech IPO Pipeline Companies |
Partner Network Centrality
While a count of the number of absolute board seats is valuable, we also analyzed network centrality concepts that explain an investors’ betweenness, reach and influence with respect to other top investors. For fun, we also used some facial recognition algorithms to understand which of the VC investors seemed happiest based on their pictures which you’ll see on the social graph visualization (see below for a link).
Below is a brief explanation of the algorithms/methodology used.
Betweenness
Betweenness is a measure of how an investor can act as a bridge along the shortest path between two other investors in the network. Investors scoring high on this measure are typically serving as brokers, middlemen or connectors in the social graph. Being a broker affords them opportunities to see deals and be a recipient of information. Given the asymmetric nature of information in the VC world, being a conduit through which communication happens is an advantage.
Top Tech Investors By Betweenness
|
#1
|
|
Benjamin Horowitz
|
Andreessen Horowitz |
|---|---|---|---|
|
#2
|
|
Mary Meeker
|
Kleiner Perkins |
|
#3
|
|
Mike Volpi
|
Index Ventures |
|
#4
|
|
Rory O’Driscoll
|
Scale Venture Partners |
|
#5
|
|
Aneel Bhusri
|
Greylock Partners |
Reach
Reach is our measure to quantify an investor’s connection depth and breadth within the network. To determine this, we look at degree centrality which is defined as the number of direct links with other investors. We also use closeness centrality which is defined as the inverse of the sum of total distances to every other investor in the network. Thus, the more central an investor, the lower its total distance to everyone else in the network. In other words, investors scoring high on the reach axis are well connected and have widespread ties within the network.
Top Tech Investors By Reach
|
#1
|
|
Benjamin Horowitz
|
Andreessen Horowitz |
|---|---|---|---|
|
#2
|
|
Mary Meeker
|
Kleiner Perkins |
|
#3
|
|
Aneel Bhusri
|
Greylock Partners |
|
#4
|
|
Mike Volpi
|
Index Ventures |
|
#5
|
|
Peter Fenton
|
Benchmark |
Influence
We express an investor’s influence by looking at the Eigenvector centrality. Eigenvector assigns relative scores to all nodes in the network based on the concept that connections to high-scoring investors contribute more to the score of the investor in question than equal connections to low-scoring investors.
Top Tech Investors By Influence
|
#1
|
|
Peter Fenton
|
Benchmark |
|---|---|---|---|
|
#2
|
|
Peter Sonsini
|
New Enterprise Associates |
|
#3
|
|
Mike Volpi
|
Index Ventures |
|
#4
|
|
Benjamin Horowitz
|
Andreessen Horowitz |
|
#5
|
|
Aneel Bhusri
|
Greylock Partners |
Notes:
The first metric we’ve evaluated in this post is based on the absolute number of Tech IPO Pipeline boards an investor sits on. To fully understand current portfolio strength, the potential exit value of the companies must also be considered which we integrate into Partner Mosaic.
By this measure, other top VC investors include:
- Jeremy Levine of Bessemer Venture Partners who sits on the board of Pinterest and Shopify
- Roelof Botha of Sequoia Capital who sits on the boards of Jawbone, Eventbrite, MongoDB, Square and Evernote
- Josh Stein of DFJ who sits on the boards of Box and SugarCRM
- Jeff Jordan of Andreessen Horowtiz who sits on the boards of Airbnb, Lookout, Pinterest, Zoosk
- Bill Gurley of Benchmark who sits on the boards of Uber and GrubHub
The interactive social graph visualization also highlights which VC partners appear happiest based on their photos and the use of some facial recognition algorithms.
With Partner Mosaic, we will be offering a data-driven and objective perspective into venture capital partner quality. Over time, we will be highlighting and diving into the other dimensions of Partner Mosaic as we use data to answer questions about who the best VCs and VC professionals are.