Each year, 15 deals account for 97% of all venture capital profits.
Andreessen Horowitz burst on to the venture capital landscape in 2009 with that simple thesis. Now they are ranked as the number one investor of choice by entrepreneurs. Go figure why.
At the same time this new firm has raised $2.7-billion while the number of active fund managers has dropped by half and only a very few fund managers (15 to 25 elite firms) are attracting 80% of new funds raised.
“The speed with which the venture firm — started by Marc Andreessen, the co-founder of Netscape, and Ben Horowitz, a former executive there — has rocketed to the top ranks has served as a case study in successful self-promotion.” New York Times, July 22, 2012
“If you were advising young entrepreneurs on their startups, you’d tell them to look for ways to ‘go direct’ to their customer base. In a sense, that’s exactly what blogging and social media allow today’s venture capitalist to do.” Mark Suster, General Partner, GRP, A Look at Venture Capitalists on the Web, OpenView Partners Report
Can (or should?) a local angel or VC who has a laser focus on the few startups that are a good fit for their expertise, try to top the list like Fred Wilson?
Granted, not everyone can attract 100,000 followers on Twitter like Dave McClure.
But just consider the flip side of the Andreessen Horowitz thesis. If you are not among the elite firms that are vying for those 15 deals that account for 97% of all venture capital profits, then you are one of hundreds of investors that are fiercely competing to get your share of the remaining 3%. (Argue with the size of pie, but not the point.)
Investors must dig into the competitive advantages afforded by open innovation, network learning and connectivism. Yesterday, McClure described these effects as a “modern-day guild” in this prescient review of the evolution of startup investing taking place globally. (Word up! for tools, tech & data platforms like Cdling that are making investing more efficient.)
Marc and Ben are real world tech rock stars. It is not the size of your social media footprint that matters the most, it is how you leverage the best tools and strategies to succeed in the real world.
We are talking about who you really are. Not public relations.
As Cdling moves from Alpha into our Beta release, we will introduce our Cdling Scores that bring your real world reputation into our platform for building trust with other investors, startups and advisors.
Cdling is designed to fit the time, focus and priorities of investors. It is a level playing field where those who are really plugged into innovation can thrive.
“Dig deeper, though, and Cdling brings intriguing visibility to the rest of the Silicon Valley ecosystem.” George Anders, Pulitzer Prize Winning Journalist, Startups’ Best Patrons, Forbes, Mar. 8, 2012.
We will save you time; deliver curated, contextualized news; help you prospect new deals; monitor your portfolio and its competitors; enable you to discover and build relationships with new co-investors (increasingly over greater distances) and most importantly, we will help you measure risk and make better decisions.
Sure we want to improve your returns. That drives us. Beyond that, we see a world where more, great Founders focus on bigger, game changing problems, faster and overall success rates for venture investors improve dramatically. Cut back on the wasted time and capital: better world.
We have already developed Cdling Scores for California and Ontario, with plans for more than 20 tech hubs globally. In the meantime, if you are an experienced investor and want to trial Cdling, email me at email@example.com and we will get you going with an advanced standing.
What signals are you sending to the best entrepreneurs and LPs?