Business Venture

These Younger Firms Are Climbing The Ranks Of Active U.S. Investors: Part Two

Editor’s note: The second and final installment in a two-part series examining the most active lead investors in the United States.

Prolific startup investors are often quite advanced in years themselves. A Crunchbase News ranking of the most active lead investors of 2019, for instance, found that most of the top ten are firms that have been around for several decades.

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Looking at that list, one might get the impression that younger firms aren’t getting much of a share in the startup action. But that’s just not so.

In fact, a lot of funds founded well after the death of the flip phone are gaining traction. A Crunchbase News analysis of U.S. startup investment activity this year by firms less than ten years old finds these firms are competing relatively well with the old guard when it comes to round counts, lead rounds and total dollars invested.

Below, we look in more charted detail at who’s most active among the younger cohort, including a lot of names not heard as often in Silicon Valley echo chambers.

Most Active Investors

First, we’ll look at most active investors overall. This metric tracks VC firms by the number of deals at Series A and beyond that they backed, regardless of investment size.

The top 14 by the most active overall metric are listed below:

When we look solely at deal count, we might expect to see more seed and early stage investors who put less capital to work per round. (An approach sometimes derisively referred to as “spray and pray,” that often also produces good results.)

However, many of these active dealmakers also appear to be putting significant capital to work, judging by their propensity to lead rounds, participate in larger rounds, and invest in smaller syndicates.

Leading the pack is Salesforce Ventures, which turns a decade old this year and has amassed stakes in over 300 portfolio companies to date. The Salesforce corporate venture arm has participated in 20 known venture rounds in 2019, which is more or less in line with its usual brisk pace.

Close on its heels is a predictable name: Silicon Valley’s Andreessen Horowitz, another roughly decade-old firm that’s known for its large and frequent dealmaking.

Corporate VCs factor heavily into the most active ranking. Besides Salesforce, also high on the list are M12, Microsoft’s B2B-focused corporate venture fund, Dell Technologies Capital, and insurance investor MassMutual Ventures.

Most Active Lead Investors

Next, we look at a ranking of most active lead investors among firms founded in the past ten years. This gives us a sense of who is both backing a lot of startups and taking big stakes.

Below, we look at the 14 most active lead investors:

This list has one name we would’ve guessed –  Andreessen Horowitz (A16Z), which ranked high on our last list also. Many of the rest are comparatively fresh faces.

Take Northpond Ventures, a Bethesda, Maryland-based firm that’s been a heavy investor in life science-focused startups, leading rounds in eight companies so far this year. Or Cultivation Capital, a St. Louis-based startup investor with five lead rounds in 2019.

Of course, “newer firm” doesn’t necessarily indicate that it’s a newcomer to the venture capital industry. Many of the most prolific newer firms are founded by VCs with a long track record at big-name firms. Goodwater Capital’s co-founder, Chi-Hua Chien, for instance, was a general partner at Kleiner Perkins. And health and fintech-focused growth investor Oak HC/FT was founded by partners at long-established venture firm Oak Investment Partners.

Most Active And Spendiest Lead Investors

Next, we’ll look at the spendiest of the active lead investors. To do this, we sum up the total value of all the early through later stage rounds each firm has led this year.

It’s not an exact science, but it gives us a good idea of who’s putting the most capital to work. In many rounds, the lead investor is the sole backer and put up all the capital. In rounds involving several backers, meanwhile, it’s generally safe to assume lead investors put up a significant, double-digit percentage.

The chart below lists firms less than ten years old that have led rounds with the highest aggregate dollar value this year.

In the above list, it’s arguable whether SoftBank Investment Advisers merits inclusion as a new firm. SoftBank itself has been investing in tech startups for decades, but established SoftBank Investment Advisers more recently with the launch of its $100 billion Vision Fund.

The next few certainly do warrant inclusion, with the list featuring unexpected names. Beyond the predictable A16Z, we see Thrive Capital, the New York-based internet and software investor that’s been scaling the ranks in recent years.

Iconiq Capital, meanwhile, likes to keep a low profile, but its client list is anything but. The San Francisco-based firm, which invests on behalf of wealthy families and organizations, counts Mark Zuckerberg and Sheryl Sandberg among its early clients. Much of its generous reserves have been flowing in recent quarters to leading giant unicorn rounds.

Another San Francisco firm in a similar vein is Greenoaks Capital, which has led some big rounds this year for trucking platform KeepTruckin and insurer Clover Health.

From Newcomer To Brand Name

The above lists of most active newer firms offer a diverse array of investment strategies and targeted sectors, so we hate to over-generalize about the group. However, one can’t help noticing a feature that many of them share in common.

It is a willingness to scale quickly. In venture and seed investing, it’s common to raise a small initial fund, wait a few years to prove out the portfolio, and raise an incrementally larger fund. That’s not what our most actives, by and large, have done. Andreessen, Thrive, Iconic, and others either started out the gate pretty well capitalized, and or followed up quickly with much bigger funds.

As the size of later-stage venture rounds has ballooned in recent years, funds have found a wide array of recipients for their growing reserves. For that to continue, we’ll need to keep seeing IPO investors and acquirers validate the high valuations now standard in private markets.

Illustration: Li-Anne Dias.