The Top Angel Investors and Venture Capital Fund Managers 2019

A Rankings Review

Thanks to CB Insights, Mattermark and Preqin, it’s now easier to find top venture capital fund managers based on performance, fees and follow-on investments.

The institutional alternative asset classes, such as Venture Capital and Private Equity, can be opaque. Nevertheless, a few FinTech firms are helping to lower costs, provide transparency and empower co-investment. That’s important as more retail, non-accredited investors gain access to alternative investments with the growth of cryptocurrencies and laws like Title III of the JOBS Act. My firm, Fund Wisdom, reviews and writes about these offerings and changes.

When analyzing results, selection bias is created by a number of things, including lack of transparency in the industry, the ability of fund managers to promote their positive performance and a propensity to hide poor performance. Below we look at angel investor and VC fund manager rankings and how they were derived.

Where We Got Our Data

The methods to analyze fund managers’ portfolio performance across asset classes continues to evolve. More accessible data makes it possible to measure angel and venture capital fund managers more objectively via algorithms.

This review of top 10 lists of fund managers intends to help alternative investors select the right asset class to invest in and improve the performance of their portfolios. Below, we compile rankings from CB Insights, Forbes, Mattermark and Preqin. You’ll find an analysis of the ranks and their evaluation methods.

[Editor’s Note: Read more about selecting fund managers with the article “Critical Considerations When Selecting a Private Equity Manager” by Nick Veronas and Mandy Peacock.]

Comparing Asset Classes

Comparing the performance of a manager in one asset class to another in a different investment sector is difficult. Differences in performance metrics, timing of cash flows, and analysis window determine the analysis.

Performance Metrics

Angels and Venture Capital often use multiples like “a return of 2x capital invested,” and Private Equity often uses Internal Rate of Return (IRR). There is little insight into compounded annual rate of return over an extended period. Therefore, comparing these alternative asset classes to one another becomes difficult, and indexing against public benchmarks (e.g. the S&P 500) doesn’t make much sense.

Timing of Cash Flows

There are also other important factors like the highly leveraged nature of private equity funds, whereas angel and VCs are rarely leveraged. Timing of cash flows also becomes an issue. When an individual or institution commits to a fund, the money gets invested over time (sometimes 10 to 15 years), which places more weight on the earlier cash flows. Fund Managers will invest or enter companies at differing stages in company growth.

Window of Analysis

One must also ask what performance window is observed.  Some rankings only look at one-year performance; others look at three years.

[Editor’s note: Financial Poise did not independently research these rankings and our publication of them should not be read as an endorsement.]

Angel Investor Rankings

Due to a lack of data on angel investment returns, most top charts focus on number of investments. CB Insights is one of the few that have showcased an in-depth rank based upon several inputs, such as network strength and rate of follow-on investment. OneVest Founder, Alejandro Cremades, most recently published a Forbes article, ranking top 10 angels based on number of investments and exits.

Angel investors primarily put money in startups at the stage entrepreneurs first look for outside (e.g. friends and family) capital. This is called seed funding. Angels will sometimes participate in follow-on funding rounds, such as Series A, B or some as late as C.

CB Insights

The top 10 ranking as of 2014.

1. Naval Ravikant
2. Joshua Schachter
3. Paul Buchheit
4. Jason Calcanis
5. David Tisch
6. Tim Ferris
7. Scott Banister
8. Esther Dyson
9. Gary Vaynerchuk
10. Ashton Kutcher

(Notes about CB Insights ranking: Angel Investors associated with institutional funds and investing in a secondary market round for a private company are excluded.)

The Investor Mosaic

CB Insights did their last Angel ranking in 2014. They created the Investor Mosaic, which leverages a multitude of variables into an algorithm to help select top performers. These variables include:

• Network strength
• Rate of follow-on investment
• Performance persistence
• Investment discipline
• Selection aptitude
• Illiquid performance
• Number of exits
• Brand

Investment discipline is measured by focus of continued investment on stage or industry.  Performance persistence is based on the time since successful exits took place. Selection aptitude is a measure of selection prowess, or ability to consistently identify winners. The illiquid performance focuses on currently un-exited private companies’ performance. Brand measures the visibility and reputation of an investor.

The data is collected by 75% scraping—the use of software that parses data sources and extracts key pieces of information:

• Company and investor
• Acquirer
• Amount of funding
• Valuation
• Date
• Stage
• Board of Directors

The other 25 percent comes from direct submissions along with partnerships with Silicon Valley Bank and the Angel Resource Institute.

What are Syndicates?

AngelList syndicates represent a significant shift to hit the venture capital and angel investment industry. Angel investors can create their own funds with many of the same resources of a venture capital fund.

Through this structure lead, investors or fund managers get access to more deals and later stages. These lead investors also receive carried interest and get paid when the syndicate performs well. Startups get more capital with fewer meetings.

Syndicates offer diversification through access to a high-risk asset class. Investing in a single syndicate can diversify your early-stage, high-risk bets. Investors can also invest as little as $1K. Leads get carried interest, major investor rights and access to syndicate investors who are often experts in the startups. These managers can also invest five to ten times their typical investment amount, which allows them to access and lead more deals.

CB Insights Top Syndicate Leads

CB Insights ranks top syndicate leads and what they do to outperform peers. It leverages the same scoring algorithm via the Investor Mosaic with a few additional variables.

Syndicate investment can be influenced by popularity, where well-known individuals (star profiles) can garner greater capital. It provides insight into the difference in backing for AngelList versus the Mosaic Score and call it the Mosaic Expected Value Delta (MEVD). Scott Banister scored very well on Network Centrality, which buoyed his Mosaic score.

CB Insights also provides a social graph analyzing network overlaps to help with achieving diversification across syndicates.

Below are CB Insights’ top syndicates as of April 2014.

1. Jason Calcanis
2. Scott and Cyan Banister
3. Tim Ferriss
4. Gil Penchina
5. Elad Gil
6. Othman Laraki
7. Fabrice Grinda
8. Ben Davenport
9. Joshua Reeves
10. Ed Rodman

Notes on this list:  It just looked at single angels and not any investment groups and it did not include Naval Ravikant.

In order to get the latest data, one must pay for access to CB Insights’ Mosaic Tool.  Fund Wisdom offers real-time, free reports on several factors by leveraging the AngelList API, or the open data connector that AngelList provides for free with a data visualization tool like Silk. One could then build an algorithm to parse each individual rating.

The ratings include:

• Number of backers
• Deals per year
• Confirmed investments
• Amount backed

[Editor’s Note: Read more about angel and VC fund investors in the article, “Private Equity, Venture Capital and Angel Investing – How Are They Different?” by Jonathan Friedland.]

Top Venture Capital Funds

Venture capitalists often use multiples, such as 10x capital invested, to tout performance. CB Insights, Forbes, Mattermark and Preqin each list top venture capital fund managers. Below, you’ll find rankings and details of factors for each.

CB Insights (2018)

CB Insights partnered with the New York Times and published a list of who they deem to be top venture capital partner performers:

1. Bill Gurley, Benchmark
2. Steve Anderson, Baseline Ventures
3. Joshua Kopelman, First Round Capital
4. Alfred Lin, Sequoia Capital
5. Brian Singerman, Founders Fund
6. Jeffrey Jordan, Andreessen Horowitz
7. Rob Hayes, First Round Capital
8. Ravi Mhatre, Lightspeed Venture Partners
9. Mary Meeker, Kleiner Perkins Caufield & Byers
10. Jeremy Liew, Lightspeed Venture Partners

Forbes (2018)

The Midas List with TrueBridge Capital Partners:

1. Neil Shen, Sequoia Capital China, Alibaba
2. Bill Gurley, Benchmark, Uber
3. Jim Goetz, Sequoia Capital, WhatsApp
4. Carl Gordon, OrbiMed, Acerta
5. Robert Nelsen, ARCH Venture Partners, Juno Therapeutics
6. Mary Meeker, Kleiner Perkins Caufield & Byers, Spotify
7. Peter Fenton, Benchmark, Docker
8. JP Gan, Qiming Venture Partners, Meitu
9. Douglas Leone, Sequoia Capital, ServiceNow
10. Brian Singerman, Founders Fund, Stemcentrx

The list is based on data collected from publicly available sources and direct submissions from the firms themselves. Midas provides a five-year retrospective at a partner’s portfolio, including exits by IPO or acquisition of $200 million or more, as well as private holdings that raised money at valuations of $400 million or more. This includes a discount for the unrealized return.

Midas’ formula favors earlier, bigger bets that return high multiples on an investor’s initial money, though a string of later successes can still make a Midas portfolio.

Mattermark (2019)

Top 10 from the Seed/Angel group

1. RiverPark Ventures
2. Blackbird Ventures
3. Reach Capital
4. Pantera Capital
5. Altos Ventures
6. Homebrew Ventures
7. Tengelmann Ventures
8. Brightspark Ventures
9. Susa Ventures
10. Beenext

Mattermark does a breakdown of each stage and provides live data and rank for free. It leverages a model that weighs the following:

• Momentum average growth scores of its active portfolio companies
• Web traffic
• Mobile downloads
• Inbound links
• Employees
• Social media

Mattermark creates synthetic portfolios for investment firms to see which firm had the strongest portfolio.

Preqin (2018)

The top 10 list

1. Tiger Global Management New York, US
2. New Enterprise Associates Menlo Park, US
3. Sequoia Capital Menlo Park, US
4. DST Global Central, Hong Kong
5. Kleiner Perkins Caufield & Byers Menlo Park, US
6. Andreessen Horowitz Menlo Park, US
7. Accel Partners Palo Alto, US
8. IDG Capital Beijing, China
9. Index Ventures London, UK
10. Lightspeed Venture Partners Menlo Park, US

Preqin offers a report with the top firms each year. The performing ranking takes into account multiple vehicles within a fund series. Preqin only assigns quartile rankings to funds that have a vantage over three years old, because more recent fund performance tends to be less meaningful.

Furthermore, the tables are restricted to active fund managers that raised a fund in the past six years, or active managers that are currently raising a fund of a similar strategy and previously raised at least three funds of a similar strategy.

In order to identify the venture capital fund managers that are most consistent, an average quartile ranking is calculated and assigned to each fund manager. Funds are then given a score based on their quartile ranking. Top quartile funds receive a score of 1.00, and second quartile funds are given a score of 2.00, etc. Finally, an average is taken to calculate the tables.

[Learn more with the FP webinar: Alternative Assets Part 1: Investing in Venture Capital, Private Equity, and Hedge Funds.]

Strengthening Your Investment Strategy

Solutions like CB Insights, Mattermark and Preqin provide thorough and objective manager rankings. These firms built tools to help investors select top managers, avoiding selection bias. Understanding their selection methods, algorithms and lists can help you when developing your own investment strategy.

Read more: What is Private Equity? A Brief History