Introducing the Investor Cluster Score™ — a measure of the signal produced by a startup’s capitalization table.

If you look at any TechCrunch article that announces the latest round of funding for the next promising startup, you’ll notice that the amount of capital raised by the company is placed on equal footing with the quality of the investors that are betting on the company. Taking an example from earlier this summer, consider Grammarly’s “$110 million from General Catalyst, IVP, and Spark Capital to take their business to the next level”. Indeed, it’s fairly common to evaluate a startup’s potential based on how much capital it has raised as well as from whom.

If you’re an experienced venture capitalist or well-seasoned startup founder, then thinking about the quality of the capital behind a startup is likely very natural to you. For others, however, this kind of thinking is probably unusual. There is a difference between raising $10 million from one institution to another, not only in the fundraising experience, but also on the end results (we have our own estimates of the probability of success per VC fund, but reference Chamath Palihapitiya’s tweet for social validation).

The idea seems simple enough, but the thought set off some interesting research in Radicle’s data science laboratory — leading to a purely mathematical expression of the signal generated by a startup’s capitalization table.

Essentially, we’ve created an algorithm that confirms what you would otherwise presume…