Venture Capital Human Capital Report | Jan – June 2010
Jan to June 2010 – Venture Capital Activity Report (Part 1)
TABLE OF CONTENTS
RATIONALE FOR THIS REPORT 2
DATA SET, DEFINITIONS AND METHODOLOGY 3
DEMOGRAPHICS
1 RACE 4
2 AGE & EXPERIENCE 13
3 NUMBER OF FOUNDERS 20
ABOUT CB INSIGHTS 27
PART 2 PREVIEW 29
© 2010, CB Insights. All rights reserved. If any questions about CB Insights, please email info@cbinsights.com. .
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2 Venture Capital Human Capital Report | Jan – June 2010
Rationale for this Report
Why measuring the Human Capital behind Venture Capital is important
Venture capital is a critical lever in the United States to spur innovation, entrepreneurship and
economic growth. As a result, there is understandably a significant amount of attention to and
celebration of deals and dollars of funding. There are quarterly recaps of aggregate deal and dollar
data and trends which receive a considerable amount of attention. In fact, we publish the first report
every quarter with these results.
But when we ask venture capitalists what gets them excited about the young, emerging, and often
unproven companies in which they invest, we never hear about deals and dollars. Rather, the first
answer is frequently “the team” or “the founders”. This demonstrates just how crucial human capital
is in VC investment decision-making.
Despite the importance of people in the venture capital equation, there is a dearth of data-driven
insight and information about the entrepreneurs behind these companies. That was the impetus for
this report.
In this first-ever CB Insights Venture Capital Human Capital Report, we are applying the same rigor
we apply to our quarterly tally of deals and dollars to provide an objective, data-driven perspective
into the people dimension behind the deals and dollars we so often read about.
This is Part 1 of the Venture Capital Human Capital report. It looks at three characteristics related
to founders of venture-backed companies, specifically: race, age & experience and the number of
founders per company.
Part 2 of the report will look at the gender and educational background/pedigree of founders.
We think you’ll find part 1 of our look at Venture Capital Human Capital interesting, enlightening, and
a catalyst for conversation and maybe even some spirited debate. If you have any questions,
comments, ideas or if we can assist in any way, please be in touch..
Best,
The CB Insights team
http://www.cbinsights.com
info@cbinsights.com
Twitter @cbinsights
www.cbinsights.com
3 Venture Capital Human Capital Report | Jan – June 2010
Data Set, Definitions & Methodology
How we compiled the Human Capital Venture Capital Report
Sample – This report focuses on the founders of private, early-stage internet companies that raised
their first round of institutional venture capital funding in the first six months of 2010. These were
Seed or Series A investments as compiled and contained in the CB Insights database.
Data Availability – CB Insights tracked 185 Seed VC and Series A investments in internet
companies in the first half of 2010. We also have profiles containing biographies on founders of
companies on CB Insights. Because of varying levels of data availability on founders, this report
contains CB Insights’ data on 165 of those companies and their respective founders.
Ethnic/Racial Composition – Our determination of race and ethnicity of founders is driven
algorithmically by data CB Insights has created on last names which leverages US Census Data in
addition to several other sources. In cases where ethnicity or race was not conclusively provided
by our algorithm, we employed human tagging. In cases where we discuss ethnicity, these
statistics reflect the Founders’ ethnicities and not the country they were born in.
The terms South Asian and East or Southeast Asian are used in the report. For clarity, South Asia
is comprised of India, Pakistan, Bangladesh, Nepal, Bhutan, Maldives and Sri Lanka.
East/Southeast Asia is comprised of Myanmar, Cambodia, Laos, Thailand, Vietnam, Malaysia,
Indonesia, Brunei, Philippines, China, Japan, North Korea, South Korea, Taiwan, Mongolia, Macau,
and Hong Kong.
Gender Composition – Our determination of gender is driven algorithmically by data CB Insights
has created. In cases where gender was not conclusively provided by our algorithm, we employed
human tagging.
Definition of term “mixed” – The term “mixed” is employed in various graphs related to gender,
race and ethnicity in part 1 and part 2 of the report. A “Mixed Gender” team is used to indicate that
a founding team consists of both female and male founders. A “Mixed Race” team indicates for
example that a team is composed of White and Black co-founders.
www.cbinsights.com
4 Venture Capital Human Capital Report | Jan – June 2010
Q1 & Q2 2010 Venture Capital Human Capital
RACE
www.cbinsights.com
5 Venture Capital Human Capital Report | Jan – June 2010
Racial Composition of VC-Backed Co. Founders vs. Census
Race - US Population vs. Founders
(Internet Seed & Series A - Jan to June 2010)
87%
77%
11% 12%
7%
4%
1% 1%
White Black Asian American Indian Other Race
US Population (18+) Founders
www.cbinsights.com
Sample size for the above graph : n=319. US population demographics via US Census (2000).
www.cbinsights.com
6 Venture Capital Human Capital Report | Jan – June 2010
87% of Founders are White
Asians comprise the second largest contingent of founders.
National - Founders' Race
(Internet Seed & Series A - Jan to June 2010)
Black
Asian 1%
Pacific
Islander
12%
White
87%
www.cbinsights.com
Cali - Founders' Race Mass - Founders' Race
(Internet Seed & Series A - Jan to June 2010) (Internet Seed & Series A - Jan to June 2010)
Asian
Asian
Pacific
Pacific
Islander
Islander
13%
18%
White White
82% 87%
www.cbinsights.com www.cbinsights.com
New York - Founders' Race
(Internet Seed & Series A - Jan to June 2010)
Asian
Pacific
Islander
11%
White
89%
www.cbinsights.com
Sample sizes for the above graphs (clockwise): n=319, n=30, n=55, n=141. Data on pages 6 and 7 reflect the race of individual founders. Pages 8-12
detail the racial composition of the founding team.
www.cbinsights.com
7 Venture Capital Human Capital Report | Jan – June 2010
Near-even Split Amongst Asian Founder Ethnicities
Nationally, South Asian and East/Southeast Asian founders are funded to a similar
extent. Massachusetts’ most skewed in favor of founders of South Asian descent.
Asian Founders - South vs. East/Southeast
(Internet Seed & Series A - Jan to June 2010)
East/Southeast
Asian
South Asian 46%
54%
www.cbinsights.com
Asian Founders in the Big Three States
(Internet Seed & Series A - Jan to June 2010)
52.0% 50.0%
75.0%
48.0% 50.0%
25.0%
California Massachusetts New York
East/Southeast Asian South Asian
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=39, n=35. Data on pages 6 and 7 reflect the race of individual founders. Pages 8-12 detail the racial
composition of the founding team.
www.cbinsights.com
8 Venture Capital Human Capital Report | Jan – June 2010
83% of Teams are All-White. All-Asian Teams Raise More $.
89% of founding teams are composed of a single race. All-Asian founding teams raise
the largest rounds.
Founding Team Demographics - Race
(National Internet Seed & Series A - Jan to June 2010)
All Asian Pacific
5% All Black
1%
Mixed
11%
All White
83%
www.cbinsights.com
Founding Team Racial Composition vs.
Median Funding Received ($M)
(National Internet Seed & Series A - Jan to June 2010)
$4.0
NATIONAL
$2.3 $2.2
$1.3
All Asian Pacific All White Mixed All Black
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=160, n=159. Data on pages 6 and 7 reflect the race of individual founders. Pages 8-12 detail the
racial composition of the founding team.
www.cbinsights.com
9 Venture Capital Human Capital Report | Jan – June 2010
77% of Cali Founding Teams are All-White
Mixed race teams come in 2nd, making up 13% of the founding teams. Asian teams
raise larger funding rounds than mixed or all-white founding teams.
Founding Team Demographics - Race
(California Internet Seed & Series A - Jan to June 2010)
Mixed All Asian
13% Pacific
10%
All White
77%
www.cbinsights.com
Founding Team Racial Composition vs.
Median Funding Received ($M)
(California Internet Seed & Series A - Jan to June 2010)
$4.4
$3.5
CALIFORNIA
$3.1
All Asian Pacific All White Mixed
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=62, n=62. Data on pages 6 and 7 reflect the race of individual founders. Pages 8-12 detail the racial
composition of the founding team.
www.cbinsights.com
10 Venture Capital Human Capital Report | Jan – June 2010
81% of Massachusetts Founding Teams are All-White
Mixed race teams come in 2nd, making up 13% of the founding teams. All-white
founding teams raise larger funding rounds than mixed or all-Asian founding teams.
Founding Team Demographics - Race
(Massachusetts Internet Seed & Series A - Jan to June 2010)
All Asian Pacific
6%
Mixed
13%
All White
81%
www.cbinsights.com
Founding Team Racial Composition vs.
Median Funding Received ($M)
(Massachusetts Internet Seed & Series A - Jan to June 2010)
$2.1
MASSACHUSETTS
$1.6
$0.8
All Asian Pacific All White Mixed
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=16, n=16. Data on pages 6 and 7 reflect the race of individual founders. Pages 8-12 detail the
racial composition of the founding team.
www.cbinsights.com
11 Venture Capital Human Capital Report | Jan – June 2010
83% of NY Founding Teams are All-White
Of Big Three States, NY has highest percentage of all white founding teams and
lowest proportion of all-Asian founding teams. All-white teams raised most.
Founding Team Demographics - Race
(New York Internet Seed & Series A - Jan to June 2010)
All Asian Pacific
3%
Mixed
14%
All White
83%
www.cbinsights.com
Founding Team Racial Composition vs.
Median Funding Received ($M)
(New York Internet Seed & Series A - Jan to June 2010)
$2.8
$2.0
NEW YORK
$0.8
All Asian Pacific All White Mixed
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=30, n=30. Data on pages 6 and 7 reflect the race of individual founders. Pages 8-12 detail the racial
composition of the founding team.
www.cbinsights.com
12 Venture Capital Human Capital Report | Jan – June 2010
All-White Teams Predominant, Followed by Asian Teams
Cali sees highest proportion of all-Asian teams. Racial composition of founding teams
and amount raised show no trend across Big Three States.
Comparison of Founding Team Demographics
- Race
(Internet Seed & Series A - Jan to June 2010)
77% 81%
83%
13%
14% 13%
3% 10% 6%
New York California Massachusetts
All Asian Pacific Mixed All White
www.cbinsights.com
Founding Team Racial Composition vs.
Median Funding Received ($M)
(Internet Seed & Series A - Jan to June 2010)
$4.4
$3.5
$3.1
$2.8
$2.0 $2.1
$1.6
$0.8 $0.8
New York California Massachusetts
All Asian Pacific Mixed All White
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=108, n=108. Data on pages 6 and 7 reflect the race of individual founders. Pages 8-12 detail the
racial composition of the founding team.
www.cbinsights.com
13 Venture Capital Human Capital Report | Jan – June 2010
Q1 & Q2 2010 Venture Capital Human Capital
AGE & EXPERIENCE
www.cbinsights.com
14 Venture Capital Human Capital Report | Jan – June 2010
Wunderkinds Not the Norm. Avg Founding Team is 35-44.
While 48% of the founding teams fall within the 35-44 average age range, companies
with an average age in the range of 26-34 have the highest median funding.
Founding Team Demographics - Average Age
(National Internet Seed & Series A - Jan to June 2010)
18-25
4%
45-54
19%
26-34
29%
35-44
48%
www.cbinsights.com
Founding Team Age Composition vs. Median
Funding Received ($M)
(National Internet Seed & Series A - Jan to June 2010)
$2.5
$2.4
$2.0
NATIONAL
$1.4
18-25 26-34 35-44 45-54
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=114, n=114
www.cbinsights.com
15 Venture Capital Human Capital Report | Jan – June 2010
California Founding Team Ages Mirror National Trend
California’s founding teams’ age ratios are comparable to national statistics. 26-34
year old teams raise the most funding. No founding teams average 18-25 in Cali.
Founding Team Demographics - Average Age
(California Internet Seed & Series A - Jan to June 2010)
45-54
18%
26-34
33%
35-44
49%
www.cbinsights.com
Founding Team Age Composition vs. Median
Funding Received ($M)
(California Internet Seed & Series A - Jan to June 2010)
$4.3
$3.5
$3.2
CALIFORNIA
26-34 35-44 45-54
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=45, n=45
www.cbinsights.com
16 Venture Capital Human Capital Report | Jan – June 2010
Massachusetts Founding Teams Tend to be Older
Average age of Mass teams most heavily favors older teams. The youngest and oldest
teams raise the largest funding rounds.
Founding Team Demographics - Average Age
(Massachusetts Internet Seed & Series A - Jan to June 2010)
18-25
8%
26-34
15%
45-54
46%
35-44
31%
www.cbinsights.com
Founding Team Age Composition vs. Median
Funding Received ($M)
(US Internet Seed & Series A - Jan to June 2010)
$2.1 $2.1
MASSACHUSETTS
$1.3
$1.2
18-25 26-34 35-44 45-54
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=13, n=13
www.cbinsights.com
17 Venture Capital Human Capital Report | Jan – June 2010
New York Fundings Favor Young
Of the Big Three, NY sees the most teams with an average age of 18-25. In general,
the age of founding teams in NY is lower than their Big Three brethren.
Founding Team Demographics - Average Age
(New York Internet Seed & Series A - Jan to June 2010)
45-54 18-25
14% 10%
26-34
38%
35-44
38%
www.cbinsights.com
Founding Team Age Composition vs. Median
Funding Received ($M)
(New York Internet Seed & Series A - Jan to June 2010)
$4.0
$3.4
$2.8
NEW YORK
$2.3
18-25 26-34 35-44 45-54
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=21, n=21
www.cbinsights.com
18 Venture Capital Human Capital Report | Jan – June 2010
New York and Mass See Whiz Kid Teams Get Funded
Mass companies are generally led by older founding teams, but do see funding to
young teams as well. Funding received and average age show no clear relationship.
Comparison of Founding Team Demographics
- Average Age
(Internet Seed & Series A - Jan to June 2010)
14% 18%
46%
38%
49%
31%
38%
33% 15%
10% 8%
New York California Massachusetts
18-25 26-34 35-44 45-54
www.cbinsights.com
Founding Team Age Composition vs. Median
Funding Received ($M)
(Internet Seed & Series A - Jan to June 2010)
$4.3
$4.0
$3.4 $3.5
$3.2
$2.8
$2.3
$2.1 $2.1
$1.3 $1.2
New York California Massachusetts
18-25 26-34 35-44 45-54
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=79, n=79
www.cbinsights.com
19 Venture Capital Human Capital Report | Jan – June 2010
Wanted: Experienced Founders
39% of founders were formerly CEOs/Founders which supports the idea that VCs back
experience. Sales/Marketing and Product Mgmt/Dev are common previous roles.
Former Title - Breakdown of Founders
(National Internet Seed & Series A - Jan to June 2010)
Consultant
Manager 4%
5%
Sr. VP
5%
Other Title
VP 28%
9%
Director
10%
CEO/Founder
39%
www.cbinsights.com
Former Role - Breakdown of Founders
(National Internet Seed & Series A - Jan to June 2010)
Strategy
4%
Software
6%
Business
Development
8%
Other Role
Engineering 46%
11%
Product
Management &
Development Sales &
12% Marketing
13%
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=285, n=114
www.cbinsights.com
20 Venture Capital Human Capital Report | Jan – June 2010
Q1 & Q2 2010 Venture Capital Human Capital
NUMBER OF FOUNDERS
www.cbinsights.com
21 Venture Capital Human Capital Report | Jan – June 2010
Going Solo and Raising VC are Not Mutually Exclusive
Although the majority of companies have two or more founders, over a third are led by
one founder. More founders does not necessarily result in larger funding rounds.
# of Founders per Company
(National Internet Seed & Series A - Jan to June 2010)
Four
4%
Three
19% One
37%
Two
40%
www.cbinsights.com
# of Founders per Company vs. Median
Funding Received ($M)
(National Internet Seed & Series A - Jan to June 2010)
$3.0
$2.5
NATIONAL
$2.1 $2.1
One Two Three Four
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=161, n=161
www.cbinsights.com
22 Venture Capital Human Capital Report | Jan – June 2010
Two-Founder Companies are the Norm in California
California sees more than half of funded companies with two founders. Funding
amounts show no relationship to number of founders.
# of Founders per Company
(California Internet Seed & Series A - Jan to June 2010)
Four
5% One
20%
Three
24%
Two
51%
www.cbinsights.com
# of Founders per Company vs. Median
Funding Received ($M)
(California Internet Seed & Series A - Jan to June 2010)
$5.8
CALIFORNIA
$4.0
$3.1
$2.0
One Two Three Four
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=63, n=63
www.cbinsights.com
23 Venture Capital Human Capital Report | Jan – June 2010
Massachusetts Says OK to Firms Led by One Founder
Of the Big Three States, Massachusetts has the highest proportion of companies with
a single founder. Companies with three founders raise significantly more.
# of Founders per Company
(Massachusetts Internet Seed & Series A - Jan to June 2010)
Four
6%
Three
25%
One
56%
Two
13%
www.cbinsights.com
# of Founders per Company vs. Median
Funding Received ($M)
(Massachusetts Internet Seed & Series A - Jan to June 2010)
$3.8
MASSACHUSETTS
$2.0
$1.1 $1.0
One Two Three Four
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=16, n=16
www.cbinsights.com
24 Venture Capital Human Capital Report | Jan – June 2010
Flying Solo in New York Gets You More Money?
Majority of New York companies have either 1 or 2 founders. However, companies
with one founder raise significantly more money than those with 2 or 3 founders.
# of Founders per Company
(New York Internet Seed & Series A - Jan to June 2010)
Three
17%
One
40%
Two
43%
www.cbinsights.com
# of Founders per Company vs. Median
Funding Received ($M)
(New York Internet Seed & Series A - Jan to June 2010)
$4.0
$2.1
NEW YORK
$1.5
1 2 3
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=30, n=30
www.cbinsights.com
25 Venture Capital Human Capital Report | Jan – June 2010
Individual Founder-Led Firms Not the Norm in California
NY and Cali both favor founding duos, while Mass founders going solo do well.
Median funding across Big Three shows no trend related to number of founders.
Comparison of # of Founders per Company
(Internet Seed & Series A - Jan to June 2010)
5% 6%
17%
24% 25%
43% 13%
51%
56%
40%
20%
New York California Massachusetts
One Two Three Four
www.cbinsights.com
# of Founders per Company vs. Median
Funding Received ($M)
(Internet Seed & Series A - Jan to June 2010)
$5.8
$4.0 $4.0
$3.8
$3.1
$2.1 $2.0 $2.0
$1.5
$1.1 $1.0
New York California Massachusetts
One Two Three Four
www.cbinsights.com
Sample sizes for the above graphs (top, bottom): n=109, n=109
www.cbinsights.com
26 Venture Capital Human Capital Report | Jan – June 2010
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27 Venture Capital Human Capital Report | Jan – June 2010
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28 Venture Capital Human Capital Report | Jan – June 2010
Part 2 Preview – Gender & Education
We will look at data related to the gender and educational backgrounds of individual
founders and founding teams.
Part 2 of our Human Capital Venture Capital Report will help answer many questions including:
• What is the proportion of male vs. female founders receiving venture capital?
• What are differences in female vs. male founders in the Big Three States?
• What % of founding teams consist of both male and female founders?
• Do heterogeneous founding teams (male & female) raise more than homogenous teams (all male
or all female)?
• Do founders receiving venture funding typically have advanced degrees?
• Does a higher level of educational attainment correlate with more funding?
• Does California prefer technical founders more than NY or Massachusetts?
• Does an MBA hurt or help a company’s prospects for receiving venture capital?
• What are the top undergraduate and graduate schools from which founders graduate?
Part 2 of the Venture Capital Human Capital Report will be pre-released to select journalists,
bloggers, investors and entrepreneurs on August 5, 2010. If you’d be interested in receiving early
access to part 2 of the report, please email us at info@cbinsights.com.
www.cbinsights.com