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The Top 5 SV VCs Under 40 - Direct + Indirect Ties & Clusters

May 14, 2007 on 9:41 pm | In Investor Analysis, In the news, Board Member Analysis |

The top five VCs under 40 — what do you think? (Venture Beat)

Venture Beat posted a poll on the top 5 Silicon Valley VCs under 40, in reference to a San Jose Mercury article.  I figured it would be interesting to answer this question using their SV capital relations with one another.  For this post, I mapped together their relational networks with each other - this illustrates the common SV company ties of Roelof Botha, Kevin Efrusy, Peter Fenton, Danny Rimer, and Peter Thiel (LinkSViewer registered users can see each individual VC’s capital networks by clicking on each user in the map and then displaying their relational map from the information window).   First, I mapped their current and former company direct ties (as board/management team members & investors) by filtering out all other people and investors: 

Top 5 VCs Under 40 Relational Map (Investors & People Excluded).  Notes: (1) Peter Thiel is the only VC that is also listed as an individual investor (yellow oval); (2) Direct Ties: (a) Peter Thiel & Roelof Botha (PayPal former management team; Xoom current/former board interlock); (b) Peter Fenton & Kevin Efrusy (Hyperic & Terracotta board interlocks); (3) Of the 28 SV companies affiliated with the VCs, 10 were acquired and 18 are currently private; (4) 4 of Danny Rimer’s SV boards were acquired (MyCFO.com, Ofoto, Neoteris, & TellMe Networks). (Source: LinkSV.com)

While the above map illustrates how these top young VCs were directly related to one another, I next examined how they were indirectly related to one another.  For this, I examined their People Map and dropped pendants (one-tie links) to underscore relations:

People Relational Map for Botha, Efrusy, Fenton, Rimer, & Thiel (Former Ties & Inactive Companies included + Pendants dropped).  Notes: Indirect People Ties: (a) Thiel-Botha: Reid Hoffman (PayPal, Tagged, & LinkedIn); and Keith Rabois (Xoom & LinkedIn); (b) Thiel-Fenton: Josh Hannah (Friendster & Benchmark); Jim Breyer (Apexon & Facebook); (c) Fenton-Efrusy: Peter Levine (Mendocino & XenSource); (d) Efrusy-Rimer: Larry Augustin (Zend &  Hyperic/XenSource); (e) Rimer-Fenton: Larry Augustin (Zend & Hyperic); Kevin Harvey (TellMe & Terracotta); (f) Rimer-Thiel: Charles Moldow (TellMe & Powerset); John Doerr (TellMe & Friendster); and James Joaquin (Ofoto & Xoom); and (g) Rimer-Botha: Mark Andreessen (Zend & Meebo); and James Joaquin (Ofoto & Xoom); Multiple Other People Ties: (a) Rimer: Jim Clark (Neoteris & MyCFO); Jim Barksdale (Ofoto, MyCFO, & TellMe); (b) Thiel: Matt Cohler (Facebook & LinkedIn); and David Sze (Wink & Facebook); (c) Fenton: Li Ping (Reactivity & Mendocino).

Next, I decided to examine the investor relations for the Top Young VCs to see how they were related to VC firms.  I used the Person-Investor Map to illustrate cluster relations.  Users should look for groupings and key links (i.e., cliques & boundary spanners from a network perspective). 

Person-Investor Map for Botha, Efrusy, Fenton, Rimer, & Thiel (Former Ties, Inactive Companies included + Pendants Dropped).  Notes: (1) The most (thickest) ties are between Accel Partners & Efrusy/Fenton (no surprise here); (2) Benchmark Capital provides a key link between Rimer & Fenton/Efrusy; (3) Greylock Partners provides a key link between Thiel & Efrusy/Fenton (Accel); (4) Three main clusters form: (a) Thiel/Botha (PayPal cluster); (b) Efrusy/Fenton (Accel cluster); and (c) Rimer (Solo cluster). 

Summary, Network Analysis, & My Vote

The purpose of these maps is to show how the top young VCs are related to one another.  Several interesting tidbits can be gained from the network analysis of their Silicon Valley connections: 

From the first map, we noted the direct ties between Botha & Thiel (PayPal) & Efrusy & Fenton (former Accel).  Rimer was direct-tie isolated from the other four (perhaps in large part due to his living abroad), but had the highest acquisition rate for his outside-board SV companies.  Thiel is the only investor of the five and it is important to note that he has management team, board, and investment ties (not to mention his role as a Managing Partner at the Founders Fund).  From a network perspective, his diversity of ties increases the reachability of his network. 

The second map demonstrated key people linkages and is perhaps the most informative of the three.  Some examples: (1) the Netscape connection of Jim Barksdale and Marc Andreessen aligns with Rimer; (2) John Doerr (Sequoia) provides a link between Thiel & Rimer; (3) the LinkedIn connection of Reid Hoffmann and Keith Rabois aligns with Thiel (as an investor and board member) and Botha; (4) Jim Breyer (Accel) forms a tie to Peter Fenton and Peter Thiel; and (5) Larry Augustin (Azure Capital/VA Software) forms multiple ties to Kevin Efrusy.  While these ties mostly reflect current and former board memberships, it is interesting to note how more experienced VCs and managers can help foster the development of and/or share innovation experiences with younger VCs.  From a network perspective, such “cosmopolites”   (generally associated with innovation and early adoption in network diffusion studies) can be found near the center of the map (betweenness centrality) or via multiple-connection ties (degree centrality).

The third map locates the VC connections of the previous maps (note how this could also have been gleaned from the Investment Map), but also provides some key linkage and clustering information.  Three clusters classified as PayPal (Thiel & Botha), Accel (Efrusy & Fenton), & Solo (Rimer) differentiated the network based on boundary spanning links between Benchmark-Accel-Greylock.  The ties between Benchmark and Accel can be associated with Fenton (who moved to Benchmark from Accel in 2006) and Efrusy.  From a network perspective, the betweenness centrality of Accel is the highest in this network (this is to be expected).  But the Greylock link is significant because they have no direct affiliation with any of the five VCs - from a network perspective their alignment with Thiel ties a boundary-spanning VC firm to an individual liaison with multiple affiliations.  There were also other VC alliances internally connecting each cluster: Sequoia Capital (Botha & Thiel); Foundation & Focus Ventures (Fenton); and Kleiner Perkins & Barksdale Group (Rimer).   

From a network perspective, I would cast my vote for Peter Thiel (not that I’m a VC expert, and yes, I’m a network junkie).  I base this on his diverse ties (as a board/management team member & angel/VC experience), relative centrality in the preceding networks, and PayPal connections.  Pragmatically, I would couch this in the requisite success of his Web 2.0-ish companies, but they seem as up-and-comers.  And I certainly can see arguments for each of the other candidates (Botha: Sequoia as prolific & PayPal + YouTube ties); Fenton for his former tie to Accel as THE key VC firm in the last network and current tie to Benchmark as a linking VC firm; Efrusy for his current tie to Accel as THE key VC firm in the last network; and Rimer for his exit success and soloability as an outsider.  Hopefully, this post has yielded some insight into the top young VCs in the Valley.  I encourage readers to cast a vote on the Venture Beat post.  May you make your own informed choice, but pay heed to the networks!