Category Archives: Venture Capital

Smart, Fit, and Beautiful: the Startups of Wearable World ’14

Posted in Venture Capital: by .

This Tuesday, over a dozen wearable tech startups gathered in San Francisco to showcase their apps, hardware, and designs at Wearable World’s first Demo Day for their Labs program. The startups’ industries ranged from healthcare to e-commerce to personal safety, but were all related to the “Internet of Things”. Listed below are the thirteen startups that presented at the first class of Wearable World:

Additional companies that make up the first class of Wearable World but were not present:

March 2014 Venture Capital Portfolio Momentum Rankings for More Than 300 Active Firms

Posted in Venture Capital: by .

Click here to view the March 2014 Portfolio Momentum Rankings

Three months ago, Mattermark released the first rankings of active venture capital firms, based on the growth signals of their portfolio companies. Today we present to you an updated report, which includes hundreds of active firms we did not previously score. We have included any firm with 15 or more active portfolio companies, who has made a new publicly announced investment in the past 6 months. The rankings are also broken out by B2B vs. B2C portfolios and investments by stage, to give you a sense of investors who are leading the charge in each of these categories.

Leading the Pack: Cowboy Ventures, FundersClub and Collaborative Fund

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View the Rankings for All Portfolios

About Our Methodology

Firms receive points based on an average of the Mattermark Score for each of their portfolio companies. This score is based on momentum, or a moving average of relative week-to-week changes in signals like website traffic, mobile downloads, inbound links, and social media following. The more dramatically positive the score, the faster the growth. A score approaching zero indicates stagnation (this is where startups go to die) and a negative score indicates a company that is currently losing growth and public mindshare. With this score we attempt to answer the question, “do a growing number of people in the world care that this startup exists?” To control for differences in the startup lifecycle, scores are weighted by relative change rather than overall volume, allowing them to compete for points on equal footing.

View the March 2014 Portfolio Momentum Rankings

Why Measuring Portfolio Momentum Matters

Growing up, I loved to watch the stock market ticker scroll across the bottom of the television screen. I’d sit on the floor as my Mom got ready for the day and she’d ask me read off the prices for the stocks our family was invested in. As a young shareholder I pored over annual reports, news stories and regulatory filings from Microsoft, Oracle, Dow Chemical, PG&E, Merrill Lynch and other public companies in our portfolio.

Fast forward to today, and I’ve create a company that builds software to track the value of companies in a different way — through signals of growth and momentum surrounding companies that are not yet publicly traded. Because access to these information on and investment in these private companies is limited we had less data to work with, but venture capital portfolios themselves provide an interesting potential for a sort of ticker tape that tracks the intra-day movement of portfolio companies’ quest for traction.

When we initially launched portfolio benchmarking in November it was in response to the question, “when will you start scoring investors?” and I think it began as more of a curiosity than anything else. The outreach from Limited Partners (the institutions and endowments who invest in venture capital firms) has been extremely educational, and shines a light on just how challenging it is to invest and set performance expectations for an asset class tasked with bringing the future into the present through technology innovation businesses. There is nothing like speaking with an LP who manages billions of dollars in a trust that is hundreds of years old, or a pension that cares for hundreds of thousands of people, to understand how extraordinary it is that venture capital — and by extension startups — exists at all.

If I have learned anything in the past year about this industry, it is that being a venture capitalist is a very difficult job. In retrospect, especially with my two years experience as a founder, I hardly know why this was such a surprise. Making things, bring them to the world, and convincing people to give their time, attention and money to a new and untrusted brand is excruciatingly difficult. Venture capitalists are investing in and providing services to some of the most tortured souls in business.

My hope is that these rankings will celebrate firms that are making great calls, whether they are well recognized name brand or up-and-coming partnerships, and encourage investors to focus on taking a portfolio-wide approach to assisting their companies with growth. I believe shedding light on growth will encourage more of it, and as investors strive to rise in these rankings they will discover the only way to get there is by helping their portfolio companies grow.

View the March 2014 Portfolio Momentum Rankings

Exclusive: FundersClub Reports Unrealized Net IRR of 41.2%

Posted in Venture Capital: by .

At just 18 months old, early stage online venture capital firm FundersClub isn’t shy about sharing performance metrics. In what some would consider a radically transparent move, the firm told Mattermark that their investments currently represent an unrealized net IRR of 41.2% across 32 funds.

They’ve yet to have a meaningful exit but explained that they are able to calculate their unrealized internal rate of return based on valuations set by follow-on funding in an equity round.

FundersClub-14 (3)FundersClub launched in the summer of 2012 after participating in Y Combinator and raising $6.5 Million in funding from early stage investors including First Round Capital, Felicis Ventures, and SV Angel. Since then the company has deployed $12M in capital from its network of more than 8,000 accredited investors to 60 startups including Coinbase, Teespring, Thalmic Labs, Virool, Estimote, True & Co, and BloomThat.

While these early results my raise some eyebrows, and can hardly be called predictive, it is interesting to note that FundersClub topped the rankings in our initial investment portfolio momentum benchmarking study from December 2013, beating out Union Square Ventures — whose IRR was reported to be 61.12% as of November 30th, 2013. With more data points we may be able to backtest the link between portfolio momentum and performance. If you’re an investor who interested in sharing your data to enable this research (publicly or privately) please get in touch.

FundersClub associate Jerrod Engelberg wrote a blog post exploring the firm’s methodology and benchmarks for making these calculations, and he explains:

[We] only counted increases in valuation when it was a third party valuation event. That is to say, we only increased the carrying value of our investment if the company received follow-on funding priced by an institutional investor. We increased the carrying value to match the post-money valuation, less the impact of any dilutive effects, such as employee option pools, convertible notes, etc. plus the impact of any anti-dilutive effects such as an active valuation cap or discount on a convertible note. For example: If we initially purchased stock in Company A at $10M equity valuation, and then Company A receives a follow-on round at a $50M post-money valuation, our investment would be carried at 5x the valuation of our original investment less any dilutive effects plus any conversion discount or valuation cap benefits.

Public Market Benchmarking by FundersClub

Top Co-Investors in the 53 FundersClub Portfolio Companies We’re Tracking

  • 36 (68%) Y Combinator
  • 13 (25%) 500 Startups
  • 9 (17%) SV Angel
  • 5 (9%) Andreessen Horowitz, ACE & Company
  • 3 (6%) Rothenberg Ventures, First Round Capital, Draper Fisher Jurvetson, Promus Ventures

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Sign up for a free trial of Mattermark Pro to view the full FundersClub portfolio overview

Are you an investor with unrealized net IRR metrics about your fund you’d be willing to share? Please contact me at danielle@mattermark.com