Why Venturepick?
In Silicon Valley, there is a well know thesis that strength of your network matters a lot for your deal flow. The wider your network is more the people you can reach which leads to greater fund exposure.
The same can be applied to founders and entrepreneurs. The more people you can reach, the better your chances of meeting right group of investors, leading to stronger group of investors that invest in your company.
Venturepick came out of a couple of studies that investigated correlation between deal flow and the network of individuals involved.
Looking at the sheer amount of investments made in the last 5 years in the Silicon Valley investors can be ordered based on following chart:
The absolute numbers in the chart above infer that the most active VC firms make from 20–100 investments per year. Since investing is a highly unscalable business, there is a direct correlation between number of investments made and number of partners that actively invest. The Angellist data proves such correlation:
The first sport seems like pretty clear — 500-startups have the biggest number of people involved in investments and are the most active investors in last 5 years. Considering the number of people listed in Angellist, YC surprisingly closes lots of deals. Apparently, they figured out a way to get huge inbound deal flow without employing lots of people. Looking down the list within the top 10 VC firms, there seems like no anomalies — the correlation(though not clear) between the number of people involved and the number of investments made.
However, if include Venturepick secret sauce and extrapolate employee individual network in order to expand the VC firm reach — we get totally different order of the most active VC companies
The VC landscape is painted differently. The last graph can explain how YC gets so many deals done with so little people. The inbound deal flow seems to be strong with these guys. It helps them scale better the business (VC) that necessarily does not scale.
We can look at A16Z, a fairly new company that made huge amount of investments in last 3 years. Their social reach and inbound deal flow seem to be one of the factors (Marc started tweeting 2 years ago!). SV Angels barely employs anyone, but still has an amazing track record and deal flow.
Each of the mentioned companies require a deeper and more thorough analysis. We plan to publish those in the upcoming weeks. Even the high level overview of the most active VC firms shows the important role networking plays in Silicon Valley and the VC world.
It was also the reason for us to start Venturepick. Venturepick aims to help investors and founders leverage their existing networks in order to get more deals closed.
Super existing times are ahead of us in 2016. Go ahead and download Venturepick iOS app and head start 2016.
