Comments on: Does a venture capitalist’s size — and network — matter? http://entrepreneur.venturebeat.com/2009/06/29/does-a-venture-capitalists-size-and-network-matter/ News About Tech, Money and Innovation Sun, 22 Nov 2009 22:58:59 +0000 http://wordpress.org/?v=2.8.5 hourly 1 By: yhochber http://entrepreneur.venturebeat.com/2009/06/29/does-a-venture-capitalists-size-and-network-matter/comment-page-1/#comment-867793 yhochber Tue, 30 Jun 2009 03:53:24 +0000 http://venturebeat.com/?p=111512#comment-867793 Matt -<br><br>Our Journal of Finance paper is very, very careful to prove a causal link between the extent of a VC's network and subsequent success. The way we do the analysis, we also get at your chicken and egg problem: our methodology ensures that we're not just capturing "success breeds a good network" -- in fact, the second half of the study looks at what factors affect a VC's network and shows that prior performance isn't really the driving cause. I invite you to read it carefully, and I am happy to chat with you about it as well. <br><br>While I can't speak for the PEhub study you reference, I can speak for our (peer-reviewed) study: We show clear evidence of a CAUSAL link between a VC's network and his success. <br><br>Also worth mentioning: size and network are not as correlated as you might think (and neither are experience and network). <br><br>Thanks for mentioning our work. Matt -

Our Journal of Finance paper is very, very careful to prove a causal link between the extent of a VC's network and subsequent success. The way we do the analysis, we also get at your chicken and egg problem: our methodology ensures that we're not just capturing “success breeds a good network” — in fact, the second half of the study looks at what factors affect a VC's network and shows that prior performance isn't really the driving cause. I invite you to read it carefully, and I am happy to chat with you about it as well.

While I can't speak for the PEhub study you reference, I can speak for our (peer-reviewed) study: We show clear evidence of a CAUSAL link between a VC's network and his success.

Also worth mentioning: size and network are not as correlated as you might think (and neither are experience and network).

Thanks for mentioning our work.

]]> By: Michael F. Martin http://entrepreneur.venturebeat.com/2009/06/29/does-a-venture-capitalists-size-and-network-matter/comment-page-1/#comment-867767 Michael F. Martin Tue, 30 Jun 2009 02:01:13 +0000 http://venturebeat.com/?p=111512#comment-867767 Dynamic centrality is the term for these sorts of networks.<br><br><a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=949358" rel="nofollow">http://papers.ssrn.com/sol3/papers.cfm?abstract...</a> Dynamic centrality is the term for these sorts of networks.

http://papers.ssrn.com/sol3/papers.cfm?abstract...

]]> By: chrisrauh http://entrepreneur.venturebeat.com/2009/06/29/does-a-venture-capitalists-size-and-network-matter/comment-page-1/#comment-867744 chrisrauh Tue, 30 Jun 2009 00:56:36 +0000 http://venturebeat.com/?p=111512#comment-867744 One should also remember that even on a high correlation, there will be a number of VCs on the list which would not do well. Even if half that list underperforms you can still see a high correlation between network size and performance. Also, you can have a correlation stronger on the other side, with small networks underperforming more than the larger ones outperforming. One should also remember that even on a high correlation, there will be a number of VCs on the list which would not do well. Even if half that list underperforms you can still see a high correlation between network size and performance. Also, you can have a correlation stronger on the other side, with small networks underperforming more than the larger ones outperforming.

]]> By: erickschonfeld http://entrepreneur.venturebeat.com/2009/06/29/does-a-venture-capitalists-size-and-network-matter/comment-page-1/#comment-867738 erickschonfeld Tue, 30 Jun 2009 00:42:43 +0000 http://venturebeat.com/?p=111512#comment-867738 Great analysis, Matt. Thanks for following up. My post on TC was only meant to provide a list of the most networked VCs, which I think is interesting in-and-of itself. I point to the earlier study just to note that there may be a correlation between network size and performance. But as you point out, we don't really know yet whether firms in the top 100 will outperform. At least now we can start tracking thee things, though. Great analysis, Matt. Thanks for following up. My post on TC was only meant to provide a list of the most networked VCs, which I think is interesting in-and-of itself. I point to the earlier study just to note that there may be a correlation between network size and performance. But as you point out, we don't really know yet whether firms in the top 100 will outperform. At least now we can start tracking thee things, though.

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