tl;dr: Money is good. Here’s where to get some more.
DoorDash picked up a massive $127 million Series C this week. That round was led by Sequoia. Notably, Sequoia also led the company’s $17 million Series A. In between, Kleiner led its $40 million Series B.
So Sequoia led two of the company’s three key rounds, taking a notable breather during DoorDash’s Series B. That interesting cadence wasn’t lost on Twitter. Silicon Valley’s ambulatory redwood and local ATM Hunter Walk had a hypothesis for the pattern, saying that the situation can “occur in cases where [an] insider doesn’t want to set pricing in successive rounds.”
In poker terms, that sounds like pot control.
Sequoia put money into all three of DoorDash’s rounds for example, even though it only led two. Two questions: How often are investors writing successive checks into their companies, and which firms write the most successive checks. Let’s find out.
Leading, Following, And Participating
I pulled some Mattermark data to dig into the question. Our records don’t sort lead investors out of a specific round, so I can measure the pace by which investors write more checks1, but not if they took point or not.
To better understand the current market, I cut broader venture data in a few ways. First, I segmented out the top 250 venture funds in the United States by aggregate amount of capital that they raised in the last three years. The goal was to discard zombie firms, and firms that might not have recently purchased a fresh set of ammunition. If we are working to understand things as they are now, we have to excise the past.
With the help of the Mattermark data team — I now owe many beers to people — I dug out the average number of successive checks that the richest venture funds have written in the past three years. It works out to 1.535 per company. That’s a measure of investor velocity. That number is calculated across series rounds, so it includes say, Series A to B, or Series B to D, etc.
That means that the 250 venture firms in our list wrote an average of 1.535 follow-on checks to their investments during the last three years.
The number feels right. Many startups raise on an 18 month timeline, so you would expect venture firms to at least double down during a three year period. Keep in mind that we are not discussing lead checks, but all checks.
Pitch These Firms
The 1.535 figure is interesting, but by itself not very useful. After all, it’s just a single floating data point. Happily, we can do a bit better. If you are an entrepreneur looking for an investor who will show up for your next round, let’s find the top kids.
From our aforementioned data set, here are the top 25 venture capitalists sorted by pace of successive checks to companies over the past three years:
- US Venture Partners
- Psilos Group
- True North Venture Partners
- GreatPoint Ventures
- Morgenthaler Ventures
- Avalon Ventures
- Domain Associates
- RiverVest Venture Partners
- The Westly Group
- Elevar Equity
- Mohr Davidow Ventures
- Fontinalis Partners
- Third Rock Ventures
- Arcus Ventures
- Gentry Venture Partners
- FutureCap
- Shasta Ventures
- Emergence Capital Partners
- Benchmark
- Inventus Capital Partners
- Lightspeed Venture Partners
- FirstMark Capital
- Carmel Ventures
- DCM Ventures
- Union Square Ventures
This list is not historically exhaustive, or predictive of future performance. Instead, it’s a list of which wealthy funds are making the most recurring deals inside of a single company. Loyalty, if you will.
A small caveat: Every venture firm has its own investing thesis. Some defend pro-rata, some do not. Some have a better set of portfolio companies so they are writing more second checks. Some, less. There are many factors going into the above list. All the same, it’s a notable list in that you know many of the names, but not all. Perhaps you should hunt more broadly.
Now, go mix a proper martini and enjoy the weekend.
1. Why do we care about if investors continue to invest in a company as it matures? It’s a very strong positive signal to other investors, and can help the company raise more, and more quickly. Required? No. Useful? Yes. From the other direction, investors that write one check and walk away are just wallets. Investors that work with their investments and help them grow, and continue to support their work are allies. There is a difference.