Thursday, December 27, 2012

Using SNA to assess the potential success of a angel or venture capital investment


Venture capitalists and business angels often form "alliances" or  syndicates to invest in start-up companies.

The goal of the research:
Analyse how a pool of investors is interconnected (social connections and collaborative connections) and identify patterns between the density of the network, closeness of investments (same industry / ...), and success of investments, and does a network of investors with a high density affect companies creations in a specific area?

Furthermore, is  a well connected network of a company's investors correlated with successful growth or exits?

This research could also provide a tool to measure one's own distance from an attractive "clique" of investors and thus finding an appropriate way to more easily access capital for startup founders.


Attributes needed:
-Is the person a Business angel or VC?
-# of successful exits the investor made
-# of deals the investor made
-Name of companies invested in
-Target industries
-Region.

For the collaborative connections between investors, ie those that have coinvested in a same company, various databases exist for venture capital companies and individuals that disclose names of the target companies, amounts invested, exits.
For angel investors, there are a lot of country-wide networks that disclose name of the members, but investments are not disclosed. It is therefore needed to survey these investors with a questionnaire.

For the social connections between investors, a rough research could be done over internet social networks such as linkedin and twitter to assess if they are 1.connected (linkedin connections / follower-following) 2.one way or two ways (has "tweeted" but didn't receive a reply ...) which can also be a proxy for the strength of the connection.

It would however be a first step for a more detailed analysis which can only be pursued with questionnaires and extensive research.

1 comment:

Christopher Tunnard said...

Dirk, This is a good start. There are studies of social connections between investors; it would be interesting to examine the qualitative aspects of these connections, as you suggest