Mattermark Daily – Monday, August 18th

Published on in Mattermark Daily by

When it comes to evaluating startups, much has been written about the 3 most important factors: team, market, and traction. When it comes to how CEOs evaluate how well we’re doing, much has been written about building the right product, hiring the right people, and making sure there’s money in the bank.

Can Mattermark data uncover the most valuable startups – without getting closely held revenue data?
We think so. Check out our first attempt, and how we got there, in“Startup Sucess Indicators: Version 0.1 of the Mattermark 100″SEE THE MATTERMARK 100

From the Investors

Brian Laung Aoaeh of KEC Ventures points to Facebook and Friendster to exemplify why it’s essential to adapt to user misbehavior in “Why Tech Startups Can Gain Competitive Advantage from Operations

Mark Suster of Upfront Ventures interviews Nanea Reeves of textPlus on product development and running a startup in “Here’s What President of textPlus Nanea Reeves Has to Say on Leadership, Mgmt, Women in Tech

Tomasz Tunguz of Redpoint Ventures focuses on increasing seed fund sizes and investments in “The Three Most Important Trends in The Seed Fund Raising Market

Jeff Carter of West Loop Ventures explains why he’s bearish on cannabis startups in “Why It’s Hard to Get Rich Growing Grass

Jonathan Friedman of LionBird proposes transferable pro-rata rights in “Ways to Improve Angel.co (Part 4)

Bryan Stolle of Mohr Davidow Ventures throws out the playbook in “The Term Sheet Doesn’t Matter – 13 Things You Should Know Before Accepting Venture Funding

Jean Case of Case Foundation doesn’t want to see gender equality and entrepreneurship stop at tech in “Let’s Boost the Ranks of Women Founders Beyond Tech

Angel Investor Mark Cuban kicks off the list with “know how to sell” in “The 6 Things You Need to Know to be Great in Business

From the Operators

Hilary Scharton of Instructure approaches product management roles as a form of servant leadership in “Balanced Product Management

Jonathan Montagu of Nimbus reassesses risk in biotech startups by asking five key questions in “Target Practice

Craig Newmark of Craigslist gives recognition to “Six Inspirational Women in Tech

Alex Taub of SocialRank protects his startup by stepping back every six months “Offsites

Startup Success Indicators: Version 0.1 of the Mattermark 100

Published on in Venture Capital by

Since launching Mattermark in June of last year, we’ve included a number called the “Mattermark Score” which started out as a design solution to an important design problem: how to present the default sorted list of companies on our first page. Much like in search engine results, we knew it would be crucial for the first page of results to be interesting and useful, but not merely the usual suspects.

Inspired by Paul Graham’s essay “Startups = Growth” I took the signals we had at the time and concocted a crude score methodology to capture the week-over-week and moving average changes of things like web traffic, mobile downloads, inbound links (similar to Google’s BackRub), Twitter followers, Facebook page likes, and LinkedIn company page followers. The score is crude because it is simplistic, weighting each signal equally and then assigning a coffecient for web traffic so that a company like Twitter would still get credit for growing 1%, while some tiny no name site wouldn’t be overly credited for growing from 400 to 4,000 uniques in the course of a month.

As a founder, this score is interesting because we all know if we don’t get our products in the hands of real people and get them talking about us we don’t have much of a shot of crossing the chasm into the mainstream. While the volume of people at the top of the funnel is different for B2B vs. B2C startups, the fundamental idea is the same. I also wanted to create a score that wouldn’t be overly influenced by short term spikes like those driven by PR events. Instead, the score gives a greater reward to consistent growth over time.

When it comes to how investors evaluate startups, much has been written about the 3 most important factors: team, market, and traction.

When it comes to how CEOs evaluate how well we’re doing, much has been written about building the right product, hiring the right people, and making sure there is money in the bank.

Lately I’ve been pondering how to bring more of the hiring and money in the bank piece into the equation, to see if it yields a *better* default sort. Better in this context is subjective, but there is definitely something to be said for meeting a user’s expectations in their first impression.

Current Top Companies in Mattermark – Sorted by Mattermark Score

allcomp_MMscore_original

While this definitely does reveal some companies that are seeing pretty incredible growth, it is not actually clear that all of them are startups. The risk of having a default list like this is that investors won’t see something they recognize, and will start to wonder about the utility of the entire tool… whether that’s fair or not.

Now let’s add a few more columns touching on most recent funding and employee count change since that event, to get a sense of who has been most successful putting the capital they raised to work to build a team. Because we track employee count as time series data, we can understand how increased employee count fits into the funding and growth timeline

Top Companies in Mattermark – Sorted by Mattermark Score, Filtered by Minimum 1 Employee Added Since Last Funding Round

allcomp_MMscore_empadded

The startups on this list are definitely more recognizable at a glance, and a quick check suggests this is closer to passing the subjective sniff test. However, it is still ordered entirely by the Mattermark Score so there are definitely some companies in here who aren’t getting nearly enough credit for massive hiring efforts. Hiring is interesting beyond operational efficiency, being able to hire a lot of people can also indicate healthy unit economics.

Now let’s just try something simplistic. What if we export a list all companies who have raised in the past year, get their Mattermark Score and multiply it by the number of employees hired since the last funding round took place and then divide that by the number of months since the last round was announced.

Here’s what the top 100 tech companies look like. If you want to dig deeper you can create your own Mattermark trial free for 30 days, and get your hands on all the underlying data like historical employee counts, round, and more than 50 other signals measured weekly for each of the 300,000 companies we track.

Ready to dive in and do your own diligence? Purchase the full analysis of 3,874 companies ranked using this methodology (the spreadsheet below, but not cut off at 100 companies) through our data store. BUY NOW

Purchase the full analysis of 3,874 companies ranked using this methodology (the spreadsheet below, but not cut off at 100 companies) for $999 through our data storeBUY NOW

Mattermark VC Portfolio Momentum Rankings Now Update Daily, Cover 644 Investors, Show Weekly Position Changes

Published on in Product Updates by

Finding out who the top performing startup investors of recent vintages will be takes time. As investors are quick to point out “lemons ripen first” and the most valuable companies can take 6 to 10 years to realize their full potential. We’ve created our portfolio momentum rankings to explore non-financial leading indicators, which may or may not indicate these managers are on the path to financial reward. The question we seek to answer is: across the entire portfolio, how much average momentum do this investor’s companies have?

VIEW ALL RANKINGS

The Results

As of publishing, the top 10 overall portfolios are Fuel Capital, Vaiza Investments, Pejman Mar Ventures, Cowboy Ventures, Kalaari Capital, Bezos Expeditions, CAA Ventures, FundersClub, Slow Ventures and Lerer Ventures.

MMranking_portfolio10

 

Start your own free trial of Mattermark Professional today to research these investors and their portfolio companies to understand more about where they are focused and what signals lead to these rankings.

Methodology

Momentum in Mattermark is measured with something we call the “Mattermark Score” which works a bit like PageRank, taking into account various signals and combining their rates of change over time to get a sense of the directional growth of the company. The signals we currently use to calculate the score are estimates website visitors, estimated mobile downloads (were applicable), inbound links, Twitter followers, Facebook page likes and LinkedIn followers.

Rankings include all investor portfolios we track that have 15 or more un-exited portfolio companies. New scores and rankings are calculated daily, and the “Trending” column will show the delta in weekly position, once this has been running for 1 week.

Curious to understand more about the methodology? Read a more detailed description of the Mattermark Score here.

In the months since we released our rankings we have begun receiving IRR data from investors privately, which will help us ultimately complete a backtest. In the meantime, several investors have reported sharing their results with current and potential limited partners as a jumping-off point for a discuss about interim success metrics beyond financial returns.

Check out the latest portfolio momentum rankings.