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
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.
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.