Venture capital: which firms have the strongest ties?

Knowing which VC firms have the best relationships can help entrepreneurs and other firms

For entrepreneurs, there seems to be a lot of decision-making that goes into raising venture capital. Part of it is whether they even should raise new money, and whether that is the right decision for them at that time. Raising money just for the hell of it is probably not a great idea. But there is another part of it: who they should raise the money from.

I've heard many, many startups talk about their values when it comes to raising money, discussing what they wish to accomplish, and whether the firm they are raising money from will help them meet those goals. But whether or not the firm will actually help them get follow-on money is another important aspect that does not seem to be talked about quite as much.

CB Insights has done something very interesting: it has put together a heat map, showing which venture capital firms, and which corporate investors, have relationships with each other to form syndicates. 

This information s important, the site says, not only for the entrepreneur, but because it can actually help the VC firms as well. It can show them which other firms they might want to have a stronger relationship with, as well. And building up those networks could help them stay funded in the long-run.

"Analyzing investor syndicate network is extremely valuable – for both venture capital firms and LPs.  For venture firms, analyzing syndicate behavior can help you identify potential follow-on investors or sources of dealflow (I see respected VC XYZ does a lot of deals with Micro-VC ABC. Perhaps we should build a relationship with Micro-VC ABC?)," CB Insights wrote.

"And since better networked VCs have better fund performance, tracking investment syndicates is important for limited partners to track as those with stronger networks generate better returns.  And although conventional wisdom (and narrative) would suggest otherwise, not all VCs have strong networks."

So, which firms have the best networks? Here is the chart the site put together.

As you can see, SV Angel has the strongest relationships with other VC firms, having done deals with Lerer Hippeau Ventures, 500 Startups, New Enterprise Associates, Felicis Ventures, Crunchfund and Founders Fund, among others. 

Others who have developed a new of strong relationships are Andreessen Horowitz, Kleiner Perkins Caufield & Byers, First Round Capital, and Greylock Partners. All of those firms have strong ties to SV Angel.

One thing that CB Insights highlights from the map is the fact that Union Square Ventures has done many more deals with Index Ventures, its only strong relationship with another venture capital firm, than its New York counterpart Lerer Hippeau Ventures.

When it comes to corporate investors, there really is only one that entreprenuers and other firms should look at: Google Ventures. It has strong ties to SV Angel, Andreessen Horowitz, First Round Capital, Kleiner Perkins Caufield & Byers, 500 Startups, Greylock Partners, and Crunchfund. No other corporate investor has even one strong relationship, according to this chart.

CB Insights notes that Google Ventures and KPCB just recently teamed up to co-led a $120 million round in workplace collaboration company Slack. Andreessen Horowitz also participated.

(Image source: perey.com)