Venture Beat cites a VentureOne/Ernst&Young Report indicating a 65% increase in spending in 2007 Q1 in the Health Sector and only 10% in the Internet/Info. Services Sector.  I examined these two Sectors SV maps to: (1) see who the key investors were in each sector (and how they were related); and (2) look behind the numbers to see some general trends in these investments.  I started by mapping the most recently funded (1/1-3/1/07) Biotech + Medical sector companies (= Health).  I then filtered out all other companies and dropped pendants in the below Relational Investment Map. 

Health Company Investment Map (1-3/07).  Notes: (1) 19 companies funded in 2007Q1 are on the map; (2) 18 investors have at least 2 investments on the map; (3) Alta Partners has by far the most investments (=7: Aerovance, Sanarus, DiscoveRx, PneumRx, Intarcia, ChemoCentryx, & Coapt), followed by InterWest Partners (=4: Intarcia, TransOral, Fluidigm, & Gynesonics), and Bay City Capital (=3: Intarcia, Gentiae, & MAP); (4) Intarcia Pharma was invested in by all three key investors (+ NEA & NewLeaf); and (5) Optovue is the only company that does not have a linked investor on the map. (Source: LinkSV.com)

I next performed the same mapping strategy for Internet sector companies funded in 2007Q1.  I then filtered out all other companies and dropped pendants in the below Relational Investment Map. 

Internet Company Investment Map (1-3/07).  Notes: (1) 19 companies funded in 2007Q1 are on the map; (2) 8 investors have at least 2 investments on the map (6 VCs & 2 Angels); (3) DFJ has the most investments (=3: Meebo, Flurry, & Pulse Mobile), followed by InterWest Partners; (4) Meebo (DFJ & Sequoia), LinkedIn (Sequoia & Greylock), Vizu (Ron Conway & Mike Maples) are the only companies on the map with at least 2 of the key investors; and (5) LiveOps, cFares, Jacent, Outspark, Mino are all companies that do not have a linked investor on the map. (Source: LinkSV.com)

Map Comparison

A few main points should be gleaned by comparing the two maps:

• The number of companies on the map are the same (19)
• The number of investors on the map are different (18 for Health; 8 for Internet)
• General connectedness for the Health Investment Map is much higher than the Internet Investment Map
• Alta Partners is a key investor on the Health Map (7 investments)
• InterWest Partners (4 investments)
• Bay City Capital (3 investments)
• 15 other investors have 2 investments on the map
• No significant key investor distinguishes themselves on the Internet Map
• DFJ has the most investments (3)
• 7 others have 2 investments on the map
• 2 of these are angel investors (Ron Conway & Mike Maples)

Company Trends

Examination of the funding numbers (From LinkSV.com company summaries) provides some insight. On Average:

• Health companies were on Round 3.2; Internet = 2.3
• Health companies received $25M in recent Round funding; Internet = $8.9M
• Health companies received $65M in recent Round funding; Internet = $24M
• Health had 8.4 investors; Internet = 5.4
• Health $/Round = $20.4M; Internet $/Round = $10.6M
• Health $/Investor = $7.8M;; Internet $/Investor = $4.4M

Summary Stats

• Health companies had about 1 more Round than Internet companies
• Health companies received around 2.8X Round funding than Internet companies
• Health companies received around 2.8X Total funding than Internet companies
• Health had 3 more investors than Internet companies
• Health companies received around 2X as much Funding per Round as Internet companies
• Health companies received around 2X as much Funding per Investor as Internet companies

Conclusions

1. While Health companies received more funding than Internet companies, they were more mature
2. While Health companies received more funding than Internet companies, they needed more funding
3. While Health companies received more funding than Internet companies, they had more investors
4. While Health companies received more funding than Internet companies, their investors had to shell out more money

What this means is that the total 2007Q1 capital reported in the Venture One report is a bit misleading because Health Sector companies needed more capital than Internet companies.  The number of investments in each sector was equal (for SV companies).  Because Internet (particularly Web 2.0) companies generally require less start-up capital, the actual $ funded may not reflect activity trends, but rather perpetuate traditional VC investment patterns.  For example, 2 of the Internet company investors were Angel Investors reflecting early-stage companies - this implies that traditional VC funding may not be necessary for these companies.   The main conclusion here is that while funding for Health Sector companies was higher, activity (in terms of number of fundings) was the same as the Internet Sector (in SV). 

Realize that the maps only indicate SV activity, which comprises about 44% of the deal flow and 48% of the total capital, thus only including a sample of the VentureOne data.  From the VentureOne/Ernst&Young Report, the overall 2007Q1 vs. 2006Q1 funding for Information Services was up 10%.  Taking this report with a grain of salt, one would expect that Health-sector companies generally require more funding, have the propensity to mature to further rounds, and may not return $ on investment until later stages.  One noteworthy trend is that the costs associated with Health Sector seem to go up (following general economic indicators), while Internet start-up costs seem to be going down (following increased availability of applicable open-source tools).  Moreover, the Venture One trends seem to be charting VC activity versus angel investment activity (this I am not sure on).  If the data does not include angel activity, then the Internet sector investment activity may be on more of the same level as the Health sector. 

Powerset is a Silicon Valley company building a transformative consumer search engine based on natural language processing. Using these advanced techniques, Powerset is building a large-scale search engine that breaks the confines of keyword search. Powerset is currently operating in semi-stealth mode. Source: Powerset Web Site.

I am interested in Powerset because its capital network is complex.  The goal is to apply LinkSViewer as illustrating and unfolding the capital complexity of the company.  Hopefully, this can provide some insight on potential alliances, support, and strategic ties.  I first examined its Relational Map including current and former relations + direct tie connections. 

Powerset Relational Map.  Counts: VCs = 4; Angels = 18; Board Members = 2; Management Team Members = 3; Related Active Companies = 8 (6 Private; 2 Acquired).  Source LinkSV.com 

Powerset Relational Map (Pendants dropped): (1) Company Ties: PayPal, Melodis, RapLeaf, Jaxtr, Friendster, Facebook, Xoom; (2) VC Co-investors: Amidzad & Felicis (Melodis); and Felicis & Founders Fund (RapLeaf); (2) Angel-VC Co-Investors: Lloyd & Felicis + Founders Fund (RapLeaf); Amidzad & Thiel (PayPal); Tenenbaum & Felicis (Melodis); Hoffman & Founders FUnd (Jaxtr); and (3) Angel Co-Investors: Hoffman & Thiel (Facebook & Friendster); Dyson & Tenenbaum (Medstory).  Source LinkSV.com

Powerset Relational Map (Pendants dropped, MinLink=3). Common Strong Ties = 3 or more common company ties: Facebook: (Hoffman & Thiel as Investor + Board Member); and RapLeaf (Alexander, Felicis, & Founders Fund). Source: LinkSV.com

Network Analysis: Powerset has connections in each map: (1) Relational Map: Shows all of the 1st and 2nd degree ties for the company - it is used to map the field; (2) Relational Map (Pendants dropped): Shows all of the 2nd degree ties for the company - it is used to highlight all relationships; and (3) Relational Map (Pendants dropped + MinLink): Shows 3 or more similar company ties - it is used to focus in on stronger company relations

Organizational Structure Analysis: Powerset has unique organizational characteristics based on the structural patterns observed from each map: (1) Relational Map: Two separate patterns are evident based on the pendants with no other relations (toward right hand side of Map1) and dyadic and triadic interlocks (toward left side of Map1); (2) Relational Map (Pendants dropped): Forms an 8-sided star connected by 8 investors and people.   Note that the VCs are connected to 4 related companies, while the Angels are connected to all 8 related companies.  Individuals are connected to all 8 related companies, while People (Management Team & Board Members) are connected to only 2 related companies; and (3) Relational Map (Pendants dropped + MinLink =3): Forms a structurally equivalent box network of strong company ties.  How might Powerset use stronger company ties to its strategic advantage?  Facebook is interesting because Peter Thiel forms both an investor and board member tie - this underscores his importance in the network as a potential liaison between Facebook and Powerset.  Operationally, perhaps there is a role of natural language searches in social networking?  RapLeaf (Online peer rating system) has three common investor ties.  Maybe there is a way to rate people’s expertise based on their most popular natural language search criteria?  In any case there are natural linkages for Powerset based on already existing ties - the goal would be to effectively utilize such resources toward mutually beneficial success.      

Angel Map - Most Active SV Angels (2006-7 Start-Ups) Investment Map (Other investors filtered out).  Notes: (A) All of these angels are connected to each other; (B) Jeff Clavier has the most recent start-up investments (4), followed by Ron Conway (3); (C) Four of the start-up companies on the map were invested in by more than one of the angels: RapLeaf (Clavier, Hoffman & Lloyd) and edgeio (Clavier, Conway, & Caufield); Kongregate (Clavier & Hoffman) and PowerSet (Hoffman & Lloyd). Source: LinkSV.com

Next I performed the same procedure for VC firms with the most investments in start-ups founded in 2006-7.  14 VC firms had at least 2 SV portfolio companies started in 2006-7: Versant, Greylock, Mohr Davidow, Founders Fund, Morgenthaler, Trident, DFJ, Amidzad, Felicis, Hummer Windblad, Y Combinator, Khosla, Sequoia, & Sutter Hill. 

VC Map - Most Active SV VCs (2006-7 Start-Ups) Investment Map (Other investors filtered out).  Notes: (A) Only Felicis Ventures has more that 2 investments on the map (RapLeaf, Powerset, & Attendio); (B) RapLeaf, Powerset, and Fliqz are the only 3 companies that were present on the previous Angel Investment Map; (C) Several paths exist on the map as co-investments: Khosla-Y Combinator (Xobni); Greylock-Morgenthaler (ZeroG Wireless); Morgenthaler-Hummer Windblad (MuleSource), DFJ-Trident (Desi Hits); Sutter Hill-Amidzad (Bix, Acquired by Yahoo); Founders Fund-Felicis (RapLeaf & Powerset); Amidzad-Founders/Felicis (Powerset); (D) Alexander Lloyd appears as a co-investor with Felicis & The Founders Fund (Powerset & RapLeaf). Source: LinkSV.com

Summary Points:

• RapLeaf, Powerset, & Fliqz have Angel and VC connections
• RapLeaf & edgeio have the most active investors (4)
• Bix is the only non-private company (acquired by Yahoo)
• Jeff Clavier has the most Angel investments (4)
• Felicis Ventures has the most VC investments (3) 

Notes:

• Many of these companies are on the map because of their multiple first-round investors {e.g., RapLeaf (8); edgeio (15); and Powerset (22)} - note that these types of companies are spotlighted because multiple investors have the potential to add value based on their unique relational capital
• On the other hand, these companies may not garner dedicated attention because there are so many investors
• The Angel Map connectedness underscores the presence of key angels in the Valley - e.g., RapLeaf was co-founded by Auren Hoffman, a prominent angel investor in his own right
• The Angel Map contains (in the most part) Web 2.0 companies who do not require large amounts of initial funding - extant technology facilitates rapid deployment via ASP- & ad-based business models
• The VC Map denotes the prominence of Angel VC firms (e.g., Felicis Ventures) - these firms are presumably less risk averse
• The VC Map connectedness highlights strands of VC relations (more decentralized than the Angel Map) - e.g., both Amidzad and Morgenthaler provide linking roles two other firms  

Applications:

• Stealth/early stage companies should pay attention to the investors on the maps who are presumably willing to fund good ideas despite limited deployment (at least in principle)
• Investors can look at the companies listed on the maps as those that may be worthy of additional round financing
• Potential employees should consider the companies on the maps as having an increased probability of future financing based on the key investors involved at the early stages of operation
• Potential partner companies should consider alliances with these early stage companies to foster their own strategic connections (particularly in win-win situations)

Lessons Learned:

• Keep an eye on the connected companies on the map (i.e., those tied to two or more investors) - this may be indicative of future avenues toward securing future financing rounds
• Angel Map: Kongregate; edgeio; Powerset; RapLeaf
• VC Map: Desi Hits; ZeroG Wireless; Mule Source; Powerset; RapLeaf; Xobni
• Note the future co-investments of the connected investors on the map for “upside” companies
• Angel Map: Jeff Clavier; Ron Conway; Reid Hoffman; Alexander Lloyd
• VC Map: Amidzad; Felicis; Founders Fund; Morgenthaler

1st Round SV Internet Companies Recent Activity Relational Map.  Large blue boxes indicate Internet start-up (1st round) companies that were funded in March, 2007.  Small blue boxes indicate all Internet companies that were funded in March, 2006 or later.  The goal is to map recent activity in the SV Internet Sector.

Network Commentary:

• 14 Internet-Sector 1st Round SV companies were funded in March, 2007 (Industrious Kid, Wesabe, Outspark.com, Scribd, Xobni, kwiry, Fliptrack, Teracent, Popular Media, Oodle, Rock You, Kongregate, Flixster, & cFares) - Source: LinkSV.com
• David Sze (Greylock: Marquee, LinkedIn, & Digg) has the most board ties (3) for Internet companies that received funding over the past year
• Peter Sonsini (NEA: Compiere & Teracent) and Ravi Mhatre (Lightspeed: Flixster & Kosmix) both have 2 board ties on the map - one 1st round company funded in March, 2007 and one over the past year

Honing in on the investor relations from the above map, I dropped pendants and for the below Investment Map: 

1st Round SV Internet Companies Recent Activity Investment Map (Pendants dropped).  Large blue boxes indicate Internet start-up (1st round) companies that were funded in March, 2007.  Small blue boxes indicate all Internet companies that were funded in March, 2006 or later.  The goal of this map is to indicate recent investment relation activity in the SV Internet Sector.

Network Commentary:

• 9 Internet-Sector 1st Round companies funded in March, 2007 have investment ties over the past year (Scribd, Xobni, Teracent, Popular Media, Oodle, Industrious Kid, Rock You, Kongregate, & cFares)
• Sequoia Capital is the most active VC in the past month (Rock You & Popular Media) and year (Xoom, Tutor Vista, NetPickle, LinkedIn, & Clearwell Systems) - 7 total investment links in the past year
• LightSpeed Ventures has 3 common investment links with Sequoia (NetPickle, RockYou, & Tutor Vista) and one other with Jeff Clavier (Wikia)
• NEA (GarageBand, Teracent, & Xoom), Greylock (Oodle, LinkedIn, & Digg), and Jeff Clavier (Wikia, Kaboodle, & Kongregate) each have 3 past-year Internet-sector investments
• Jeff Clavier and Reid Hoffman (Digg, Kongregate) are the only two angel investors on the map
• Y Combinator (Scribd & Xobni) Steamboat Ventures (Popular Media & Industrious Kid) both have 2 Internet-sector investments in the past month

Practical Uses (Whys)

The above map and analysis can be used to see who has been active in the Internet Sector over the past month and year.  It is meant to save users time by illustrating funding activity in one map with one-click summary information (in the Information Window or to LinkSV Company Summaries or People Profiles).  This information can be used by companies seeking funding, VC firms or angels surveying the investment space, or anyone looking for latest trends.  Some potential specific questions:

• Who are the recently active investors?
• What companies are they co-investing in?
• How are these companies related to each other? 
• How are these companies related to my company?
• What are the capital-based ties for collaboration?

Of course, LinkSViewer 1.2 can generate similar activity maps for different sectors, datelines, keywords, rounds, capital $, etc.  It can also be used to find board member and/or management team relations in addition to investments.  Registered users are encouraged to play around with either of the above maps (e.g., filter, node or link alteration).  We plan on integrating this festure into our front page as a way to help registered users quickly discover recent funding activity and relationships (Thanks to Paul Sherer at PodTech for this suggestion).  Contact us if you have any suggestions or specific requests for activity maps. 

Matt Marshall of Venture Beat wrote an interesting item on Sean Parker’s newest venture, Project Agape.  One line (quoting Parker) in the post particularly struck my attention.

“The social graph,” he says, referring to the connection people have with others through multiple degrees, “is the critical ingredient.”

Thus, I found it fitting to illustrate Sean Parker’s network of relevant people, investor, and company connections in the Silicon Valley using LinkSViewer.  Project Agape is still relatively stealth, but there are a few key points from Matt’s earlier interview: Sean Parker’s strong ties to Peter Thiel, and their VC Firm, The Founders Fund.  From this limited info., I searched for and mapped Parker, Thiel, and The Founders Fund together (Source: LinkSV.com).  First I looked at their People Map and then their Investment Map (Pendants dropped).

People Relational Map for Peter Thiel (Investor = Yellow; Outside Board Member = Peach), Sean Parker (Investor = Yellow; Management Team Member = Rose), and The Founders Fund (Tan) - Pendants dropped.  Notes: (1) Related Outside Board Members: Michael Moritz, John Malloy, Roelof Boetha, Keith Rabois, Konstantin Guericke, Reid Hoffman, David Sze, Tim Koogle; (2) Related Management Team Members: Max Levchin; Matt Cohler; (3) Related Companies: Plaxo, Facebook, Friendster, PayPal, Poewerset, Xoom, Tagged, Slide, LinkedIn, Wink, Jaxtr, RapLeaf, Engage.com, Quantcast. 

Network Commentary: Facebook, Plaxo, Friendster, PayPal, and Powerset form central roles in the network as directly linked to Parker and/or Thiel.  Also note the Web 2.0 nature of the network and how all of the companies have been funded in the past 2 years.  David Sze (Greylock) and Reid Hoffman (LinkedIn President, Co-Founder) form key hubs in the network with 3 connections.  The LinkedIn link is also interesting based on the ties to Konstantin Guericke (LinkedIn Co-founder, Ex-VP Marketing), who is now CEO at Jaxtr.  In general, Peter Thiel plays a gatekeeping role connecting the network (as both board member and investor).

Investment Relational Map (same target nodes).  Notes: (1) Related VCs: Felicis, Amidzad, Mayfield, Sequoia, Greylock, BlueRun; (2) Related Angels: Alexander Lloyd, Josh Kopelman, Gil Penchina, Reid Hoffman, Tim Koogle, Ram Shriram; (3) Related Companies: Plaxo, Facebook, Friendster, PayPal, Poewerset, Xoom, Tagged, Slide, LinkedIn, Wink, Jaxtr, RapLeaf, Engage.com, Quantcast

Network Commentary: The companies on the map are the same from the above people relational network.  Both Reid Hoffman and Tim Koogle are the only two people to appear on both maps.  Hoffman has the most Angel ties (4), followed by Gil Penchina (3).  Sequoia (PayPal, Xoom, Plaxo) and Greylock (Wink, LinkedIn, Facebook) have the most VC ties (3).  Note how Powerset forms a central role in the network (8 ties).  This is in part because they had 22 investors, but also because it provides direct linkages to Founders Fund, Thiel (Investor + Board Member), and Parker (his only investment on the map). 

Summary and Speculation

In general, there are some interesting connections on the map, maybe some of them will migrate over to Project Agape?  Parker’s key lesson from Napster (from Matt Marshall’s interview) was that he learned ”about who to hire and who to take money from.”  Gleaning from the Venture Beat article, it does not seem that Sequoia or Sherpalo will be likely investor candidates.  Perhaps key angels (e.g., Reid Hoffman, Alexander Lloyd, or Josh Kopelman) or VCs (e.g., Felicis Ventures, Amidzad, or Greylock) on the investment map will play a future role?  On the people side, maybe David Sze and Reid Hoffman (like Savoir Faire, Reid is everywhere) will play future board member or advisor roles to Agape?  Of course, this is all speculation (from an outsider).  The overarching point here is to illustrate how company decision makers (deciders) can use LinkSViewer to graph social capital relations.  In general, visual social networks can be used to leverage and build personal relationships. 

Felicis Ventures Relational Map.  Notes: (1) Investment ties to Web 2.0 companies Dogster, BuzzLogic, RapLeaf, & Feedster; (2) Co-Investor Ties to Web 2.0 Top Angels Gil Penchina, Ron Conway, & Jeff Clavier.  The above map references the last map on our CapitalBLOG post combining Top Web 2.0 Angels w/ VC Firms.

Aruba Networks to test appetite for risky bets (Reuters)

Relational Map of Aruba Networks.  Notes: (1) Public company ties to Sequoia and Matrix (Apple & SanDisk); (2) Public company tie to Daniel Warmenhoven (Network Appliance CEO).  Reference CapitalBLOG post (2/7/07) comparing Aruba to BigBand and GluMobile (recent IPOs).

Commentary: I remain bullish on Aruba upon their IPO (realize that I am no expert on stock speculation).  Given the initial high value of IPOs for BigBand and GluMobile (despite having posted similar losses), Aruba seems in better position based on their investment pedigree - irrational markets call for irrational methods.  Certainly, I do not suggest that Aruba will perform well over the long haul, but trends indicate that it should perform well at IPO.  We’ll see what happens on Monday.

Update: Aruba raised $88M on $8M shares for $11/share. compared with the estimated forecast range of $8-$10/share. 

At this rate, counting Web 2.0 deals will soon become meaningless because all Web startups will be Web 2.0 companies.  You could argue that is already the case.  The number of Web 2.0 startups out there is much greater than these numbers may suggest, because many of them are self-financed or take on only angel money.

I decided to investigate the following two questions using LinkSViewer maps: (1) What role did the top Angel Investors play in Silicon Valley Web 2.0 companies in 2006?; (2) How do they compare to the top VC Investors? 

I first examined the top 15 SV Angel investors - these were individuals with two or more Internet companies funded in 2006.  The resultant 15 individuals (alphabetically): Mark Andreessen, Ron Conway, Frank Caufield, Jeff Clavier, Auren Hoffman, Reid Hoffman, Mitch Kapor, Josh Kopelman, Mike Maples, Pierre Omidyar, Gil Penchina, Kenwal Rekhi, David Rose, Michael Tanne, and Peter Thiel.  Click on image for Full-Size (navigable) LinkSViewer Map.

Note how all 15 Angel investors are connected to one another (i.e., reachable in graph-theoretic terms).  It helps that 7 of these individuals invested in Wikia (clearly a hub in the network).  Conway, Reid Hoffman, Andreessen, Tanne, Kopelman, & Penchina all play key gatekeeping roles in the network.  26 Internet companies are on the map and a fair amount of them are considered Web 2.0 companies: RapLeaf, Wikia, Kaboodle, Dogster, edgeio, Riya, Feedster, Krugle, Digg, REVa, Friendster, Xoom, Socializr, Six Apart, Technorati, Engage, and Wikia.  If my estimates are correct (and I am no expert here), then 17/26 are Web 2.0 companies, which supports Erick Schonfeld’s hypothesis that Web startups (in this case, and more specifically, Internet sector startups) are becoming Web 2.0. 

I next mapped the top 13 VC investor SV Web 2.0 deals in 2006 as noted by the Venture One and Ernst & Young report (in order of most deals): Benchmark, Sequoia, DFJ, Omidyar, Accel, General Catalyst, Mayfield, KPCB, Bessemer, Mobius, Greylock, & Redpoint (note that BV Capital and IDG China did not have any SV Internet investments in the LinkSV database for 2006).

Here we see a more disconnected network with fairly few VC co-investments (or inter-company clustering).  Benchmark, Omidyar, and Accel form central hubs in the network.  But Mayfield, Mobius, and Storm are isolates and Redpoint, General Catalyst, and KPCB (surprise?) are pendants in the network.  Examining the companies in the network, there are 63 (if my count is right) Internet companies funded in 2006 - thus VCs are certainly alive and well on the Internet.  But only 11 companies are co-invested by the top investors (Yodlee, Clearwell, Prosper Marketplace, Metacafe, Glam Media, Metaweb, Marquee, Wikia, Digg, Yelp, and Friendster). 

The disconnected nature of the network leaves me somewhat scratching my head, but perhaps it can be explained by the fact that most of these companies do not require much start-up capital and therefore discourages multiple VC co-investors ($1M as a drop in the bucket).  For example, take Sequoia as the lone investor in YouTube.  But this seems odd based on the history of co-investing relations of VC firms.  Maybe as these companies mature in round funding, they will have more co-investment ties - but with the flip and turn of Web acquisitions, this may not ever happen.   

Of course, I have one more begging question, what happens when I overlap the two maps onto each other?  For this I took the previous VC Investment Map and included the Angel investor ties. 

What is interesting about this map is that 9 of the 15 angel investors appear in the VC Investment Map.  These angels connect Kleiner, Mobius, Sequoia, Bessemer, and Greylock on the map.  My sneaky suspicion is that angel investors are important to the Web 2.0 world not only for their capital, but because of their linking role - one traditionally held by VCs.  We can also see how new VC firms such as Omidyar Ventures (and duly noting the role of Pierre Omidyar as an individual investor on the maps) form bridges between Angel and VC investors based on their co-investment structures - they seem as an anomaly in the network.  But clearly their recent success could be attributed to their co-investments with key angels.  

Again curious, I decided to overlay the VCs onto the Angel Investor Map:

Here, only 4 of the top VCs appear on the map: Omidyar, KPCB, Greylock, & Benchmark.  Only Omidyar and KPCB have more than two links.  Other VCs appear on the map - most centrally Felicis, The Founder’s Fund, Foundation Capital, and Intel Capital.  This could be because many of these firms are more geared toward Angel financing, but this is not always the case.  It may also be because of the limited amount of capital needed or that the bigger VC firms may want to “go it alone” when it comes to Web startups.  Certainly the multitude of Web 2.0 companies may mean that there is simply not enough time to review all of the companies at one time or that there could be conflicts of interest with existing prortfolio companies.  Of course, I am speculating here as a non-insider (so take this with a grain of salt).  In any case, it seems that Web 2.0 is changing the landscape (or is the landscape changing Web 2.0?).  I am interested in comments here. 

Top VC Web 2.0 Relational Map.  Notes: (1) The inclusion of prominent Web 2.0 companies such as AdMob, Bebo.com, Digg, JAJAH, MetaCafe, Wikia, and YouTube; (2) The VC connections to Accel, Globespan, Fidelity, Bessemer, and Greylock; and (3) The Angel investor connections to Ron Conway, Marc Andreessen, Gil Penchina, Mitch Kapor, Josh Kopelman, Reid Hoffman, & Peter Thiel.   

Commentary: The people, companies, and investors in the map provide an indicator of the key players in the Web 2.0 space.  The filter of Internet companies funded in 2006 resulted in many companies in the Web 2.0 space - that the Internet and Web 2.0 are becoming more synonymous in recent times.  Realize that this only includes Silicon Valley companies (although this accounts for about 50% of all Web 2.0 investments from the Venture One report).  Realize that the maps would be different with other VC firms included, this is just a slice of the Web 2.0 space.  Angel investors are more prominent in the Web 2.0 space because there is less money needed for a startup and this fact may result in actually more Web companies taking on capital from non-VC firms (see Business 2.0 Editor Erick Schonfeld’s blog for this initial observation). 

Illustrating the connections in the above map in more detail, I used LinkSViewer to drop pendants or single-tie connections.  I then separated the above map into investors (Investment Map preset tab) and inside and outside boards (People Map preset tab).  The Investment and People Maps (with pendants dropped) ensue… 

Top VC Web 2.0 Investment Map.  Notes: (1) Omidyar Network has the most ties to Angel investors (note bright yellow cluster at top); (2) Peter Thiel forms the lone Angel tie to Sequoia & Benchmark; and (3) Benchmark forms a bridge between all VC firms (as a linking VC co-investor). 

Commentary: Omidyar Network as a relatively young VC Firm seem more prone to invest with Angel Investors.  Benchmark is a central player because they tie other VC firms together (not only because they have the most investments in the Web 2.0 space). 

Top VC Web 2.0 People Map (Board Member Ties): Notes: (1) Omidyar & Benchmark board interlocks: David Sze (Greylock), Jeremy Levine (Bessemer), and Bob Kagle (Benchmark); (2) Benchmark & Sequoia board interlocks: Venky Ganesan (Globespan) & Bud Colligan (Accel); (3) Sequoia board interlocks of partners Roelof Boetha (YouTube, Xoom, & InsiderPages) & Jim Goetz (Clearwell Systems & AdMob); and (4) Tony Nethercutt as the lone Management team member with connections on the map (Former VP Advertising Sales at YouTube, Current VP Sales at AdMob). 

Commentary: The linking outside board members are from other VC firms (with the exception of Bob Kagle (Benchmark) - this indicates that the importance of other VC firms in the direction of Web 2.0 companies.  Sequoia seems to have more control over their Web 2.0 companies as noted by their internal board interlocks.