Union Square Ventures, Bowery Capital top the ranking. Sequoia ranks 11. Andreessen Horowitz ranks 339.
Union Square Ventures topped a new ranking of venture capital firms.
The “Founder’s Choice” ranking — based on 388 verified founders — asked startup founders to vote anonymously on which investors they’d be most inclined to take money from again.
Bowery Capital (2), Bonfire Ventures (3), Initialized Capital (4), and (5) Y Combinator rounded out the top five.
Of the larger, brand name venture firms, Venrock (9), Founders Fund (10), Sequoia Capital (11), and Khosla Ventures (13) performed particularly well.
Lux (56), GV (60), Greylock (70), Battery Ventures (71), NEA (79), and Index Ventures (97) ranked in the upper quartile of firms.
Meanwhile, Accel (133), Lightspeed (136), General Catalyst (165) disappointed relative to their strong global brands.
But perhaps no firm’s result shocked me more than Andreessen Horowitz (339). The venture capital firm ranked among the bottom quartile of firms.
Two young coders, with the encouragement of Bloomberg Beta leader Roy Bahat created the new ranking of venture capital firms, called Founder’s Choice.
Jerry Ye and Daniel Tao — who have studied at the University of Pennsylvania together — built the chess-like ranking system. Altogether 388 founders judged their investors in head-to-head matchups to create Elo rankings for 419 different tech investing firms. They asked founders, “Which (firm) would you rather have as an investor?”
Founder’s Choice gave Newcomer the exclusive first look at the results.
I didn’t have a say in the ranking methodology or the final list. I agreed to publish the list before seeing the results.
I think Founder’s Choice represents an interesting crack at the perpetual challenge of judging investors. It’s a list that will improve over time.
The creators of the ranking acknowledge that the list — like all attempts to rank venture investors — inherently has flaws. Notably, firms that promoted the survey link seemed to do better. Foundry Group, which promoted the ranking, came in 7th. Sponsors Bloomberg Beta (6), Precursor Ventures (28), and BBG Ventures (141) performed relatively well.
Ye and Tao wrote:
We recognize that our first leaderboards may be biased by the sample of which VC’s portfolio companies submitted rankings, but we believe that over time the leaderboards will reflect a broader pool of rankings as more founders submit.
VC rankings have a long history of controversy. I remember the backlash when Social Capital collaborated with The Information on its diversity list. And Forbes’ Midas List is a regular source of debate within venture capital. I’m not suggesting this list is perfect. Probably the best ranking of venture capitalists is the private YC investor directory that’s shared with Y Combinator portfolio companies. Founder’s Choice is an effort to create the magic of YC’s exclusive guide for a broader audience.
The Founder’s Choice creators plan to update the list in January 2023 as more survey respondents participate. So, the list could shift dramatically over time.
Ye, one of the creators of the list, said that he’s heard horror stories about VCs over the years and this is one way to provide new founders information on the people they’re considering tapping for capital. “The grand vision of this is just giving people without that much access some sort of knowledge of how these investors actually work with their founders,” Ye said.
Ye — who has worked as an intern at Bloomberg LP — recommended founders do their own diligence and pay more attention to the section of the list that a firm fell into rather than obsess over the difference between a few rungs.
Bahat made the case for the ranking on Product Hunt a few months ago:
As a founder and now as a VC, I’ve wanted this to exist for a long time... a founder’s version of the Midas List. Too much of the knowledge of which investors are good is buried in private networks — it should be public. This fixes the flaws of past approaches at public founder feedback on VCs:
>Verifies identities (even though nobody’s identity is revealed, and it’s all stored securely)
>Only ranks VCs who have invested in that founder (it’s about working together more than the pitch experience)
>Only ratings, no text comments, so no hate, no sour grapes... each founder’s vote has same weight
- Venrock (9)
- Founders Fund (10)
- Sequoia Capital (11)
- Khosla Ventures (13)
- SoftBank Vision Fund (41)
- CapitalG (43)
- Lux Capital (56)
- GV (60)
- Greylock (70)
- First Round Capital (98)
- Spark Capital (130)
- Accel (133)
- Lightspeed Venture Partners (136)
- General Catalyst (165)
- SV Angel (166)
- Tiger Global Management (176)
- Kleiner Perkins (216)
- Insight Partners (226)
- Floodgate (252)
- Bessemer Venture Partners (326)
- Andreessen Horowitz (339)
- 500 Startups (349)
- There are more firms on the list (419) than founders ranking them (388). So unequivocally a fairly small universe of founders carries a lot of weight here. While Founder’s Choice revealed how many comparisons each firm received, the same voter could compare a particular firm to all of their other investors and rack up a number of comparisons for the same firm.
- I wonder if Andreessen Horowitz’s seed program has left a bunch of founders unhappy that the firm didn’t spend more time with them. Or party rounds could leave the firm vulnerable to comparisons against more involved investors. Altogether, Andreessen received 218 comparisons, a pretty robust number compared to other firms.
- On the flip side, given that many elite venture firms didn’t live up to their brands, Founders Fund’s 10th and Sequoia’s 11th place rankings really stand out.
- There doesn’t seem to be bias toward a particular stage. Among accelerators, Y Combinator (5) dominated while Techstars ranked 132nd and 500 Startups ranked 349th. Among elite early stage firms there was also a wide range of performance. USV topped the list but rival First Round Capital came in 98th. Meanwhile, Floodgate ranked 252nd and Slow Ventures came in at 377th.
- There seem to be fewer survey results for late stage firms. The list required 25 or more comparisons to be included. Coatue is absent as is Altimeter, Greenoaks, and D1. And Benchmark and Forerunner Ventures are also surprisingly absent from the list.
- What will happen with Initialized Capital? Garry Tan is leaving the 4th ranked firm to become the CEO of the 5th ranked one. While it was a great hire for Y Combinator, Tan’s departure left Initialized — which already lost co-founder Alexis Ohanian — in a lurch, scrambling to explain Tan’s decision to its limited partners. Will the firm be able to hold onto what it built without Tan at the helm?
- New York City-based firms ranked 1st and 2nd. That could reflect the geographic biases of the founders who participated.
- I’ll admit I hadn’t really heard of Bowery Capital (2), Bonfire Ventures (3), TTV Capital (8), Garden City Companies (14), Canapi Ventures (15), VMG Partners (16), or Costanoa Ventures (17). So these results definitely do not track directly to Silicon Valley prestige. If I were to rank venture capital firms personally, these would not be the results. But that’s part of the fun of a list like this — it helps to surface off-the-radar quality firms based on attributes other than media savvy, returns, or assets under management.
Where technology and venture capital intersect: A deeply reported newsletter on the inner workings of the startup industry written by Eric Newcomer.