Khosla Takes the Top Spot, Andreessen Soars in Updated Founder's Choice Rankings
USV ranked #2, Two Sigma Ventures #3, a16z #4, and First Round #5
Union Square Ventures — which topped the ranking when I first published them in September 2022 — slipped one notch. It was a remarkable feat of consistency in a ranking that saw substantial shifts, with the most notable jump being Andreessen Horowitz’s leap from 339 to fourth.
Two Sigma Ventures — an early-stage venture fund that counts among its partners the well-liked Villi Iltchev — ranked third on this iteration of the rankings, while dominant early-stage investor First Round Capital filled out the top five.
The venture capital scorecard is the brainchild of coders Jerry Ye and Daniel Tao, with the encouragement of Bloomberg Beta’s Roy Bahat. The rankings give startup founders an opportunity to anonymously vote on the venture firms on their companies’ cap tables. The rankings use a chess-like ELO system to score venture capital firms. (I don’t have a say in the ranking methodology.)
For this first update to the rankings, the number of founders participating nearly tripled. This new ranking reflects the feedback of 1077 founders, of which 689 are new to this iteration. For this go around, Founder’s Choice also culled the list, requiring that venture firms receive at least 100 comparisons before being included.
Some venture firms are actively encouraging founders to participate in the rankings. No objections to that. The more founder rankings, the better. I’ll note here that Khosla Ventures has more comparisons than some much larger venture capital funds.
There is likely a selection bias where firms encouraging founders to vote are seeing boosts to their performance — though if a venture firm tells a bunch of founders to rate them and those founders think poorly of the firm, that won’t help. Hopefully as the number of founders participating grows over time the selection bias will fall.
“From my perspective, it’s impossible to tell how much of the change in a certain firm’s placement came from the much bigger sample size, changing sentiment in how the firms are viewed, or just getting more data on other firms (some firms went down just because some brand new firms were rated and rated very well),” the ranking’s co-creator Ye wrote in an email.
Personally, I enjoy the rankings particularly when they highlight firms outside the storied, elite venture funds. Two Sigma Ventures (#3), Hoxton Ventures (#8), Hyde Park Venture Partners (#9), Tribe Capital (#10), QED Investors (#13), and Flourish Ventures (#14) should pat themselves on the back for their standing with founders.
And Bowery Capital (#6) and Bonfire Ventures (#11) — which finished second and third respectively in the first iteration of the survey — remained in the top 20.
There are a couple brutal contrasts among the rankings. Startup accelerator Y Combinator ranked seventh while rivals Techstars and 500 Global ranked in the bottom half. Coatue ranked 29th, SoftBank Vision Fund ranked 61st, and Tiger Global came in at 103rd.
There were a few dramatic drops. Revolution’s Rise of the Rest Seed Fund fell from 12th to 136th. Initialized Capital fell from fourth to 57th. Initialized co-founder Garry Tan left the firm to lead Y Combinator.
With Andreessen Horowitz now at a strong fourth in the rankings, perhaps it’s time for Marc Andreessen to update his Twitter status.