Who Are the Most-Connected Venture Capitalist Board Members in the Technology Sector

Who Are the Most-Connected Venture Capitalist Board Members in the Technology Sector?

This research project was carried out to determine who were the “most-connected” venture capitalist board members in the technology sector.  For quite some time, I have wondered if the field of venture capitalism is truly as “inter-connected” as I hear about or read about in newspapers.  For example, I regularly read and heard comments like “Mr. X really has connections in the VC world”.  So I decided to see if these types of statements were really true.

The essence of my research project was to collect data on the boards of directors of all companies that went public during the “dot-com” explosion.  This is based on the premise that venture capitalists that invest a significant amount of money in a company will generally demand a seat on the board of directors of that company when the company goes public.  The board of directors data was entered into a database and networking software [1] was used to calculate the “degrees-of-separation” of each board member.  (For those of you who don’t know what “degrees-of-separation” means, it is the average of the shortest path lengths from one node in a network to all other connected nodes in that network.  So, the node that has the average shortest paths to all other nodes can be considered in some sense to be the “most connected” node in that network.)

After all data was collected, the database contained records of:

·       749 companies that went public in some technology sector on the NASDAQ during the dot-com explosion (I collected data from January, 1998 through October, 2001)

·       4,057 individuals that served on boards of directors of those companies

·       30,412 “connections” that indicated that two individuals served on the same board of directors of some company.

Perhaps the most surprising result was not the actual listing of who were the “most-connected” venture capitalists, but that, of the 4,057 individuals, 2,375, or almost 60% were somehow connected to each other.  (The other 1,682 individuals were connected to smaller groups of interconnected boards, sometimes in groups that only included one company’s board of directors.)

By the way, I presented the results of this research project at an academic information systems conference [2], but only a very small number of people showed up (I’m embarrassed to say the exact number).  Perhaps I didn’t choose an appropriate title for my presentation: “Degrees of Separation as a Measure of Venture Capitalist Board Member Connectedness”.  One of my prior conference presentations [3] on a related topic (determining the level of connectedness of MIS researchers – my own field of education) was much more highly attended, but the title of that presentation was “Kevin Bacon, Degrees of Separation, and MIS Research”.

So, to satisfy your curiosity, the list of the top 100 venture capitalists is (remember, this list is qualified as “venture capitalists who were on boards of directors of companies that went public on the NASDAQ in a technology sector from January, 1998 through October 2001”):

If you are at all familiar with the venture capitalism field, the names on this list should come as no surprise.  However, as someone once told me, getting a Ph.D. is sometimes merely “proving the obvious”.  But as scientists will often tell you, just because something is “obvious” doesn’t mean that it’s true.  So, this research project satisfied my curiosity (and, hopefully, yours as well) about who were the most-connected venture capitalists, using my analytical methodology and dataset.  Perhaps most interestingly, it also showed that the group of venture capitalists is a fairly highly inter-connected group.

If you are interested in the details of the research project, please contact me at: pbeckman@sfsu.edu or 415-338-6240.

REFERENCES

[1] Borgatti, S.P., Everett, M.G., and Freeman, L.C.  UCINET 5.0 Version 1.00.  Natick: Analytic Technologies, 1999.

[2] Beckman, P. and Gosen, H.  “Degrees of Separation as a Measure of Venture Capitalist Board Member Connectedness”, presented at the 32^nd Annual Meeting of the Western Decision Sciences Institute, Kauai, Hawaii, April 15-19, 2003.

[3] Beckman, P. and Forsman, Å.  “Kevin Bacon, Degrees-of-Separation, and MIS Research Productivity”, HICSS 2002: 255.

© Copyright Paul Beckman, August, 2003.