
Zombie VCs - jayzalowitz
http://www.daniellemorrill.com/2013/04/zombie-vcs/
======
asanwal
Yes -- there are many Zombie VCs. And glad to see Danielle doing this stuff
but you have to be careful in drawing these conclusions.

First, many funds don't do Series A's. That is their strategy. At the top of
the spreadsheet are several funds that are mid, later, growth and private-
equity stage firms (IVP, Warburg). Them not doing Series As has less to do
with their Zombie status then them adhering to their strategy.

While there are other issues with the data as highlighted below, this issue of
fund strategy is a critical one so wanted to highlight.

Also, picking short timeframes of 3 months or 1 month isn't a great test as
funds have 7-10 year lifetimes. A couple of months doesn't make for a trend.

Again, we think there is value in highlighting this data as there tends to
only be good news reported but just would caution against errant conclusions.

Notes: I'm one of the co-founders of CB Insights and our firm tracks this
data. We actually help LPs (the investors in VC funds) identify VCs doing
poorly or who appear to be the walking dead. But it's messy as hell.

More on that here for folks interested - [http://www.cbinsights.com/team-
blog/investor-analytics-zombi...](http://www.cbinsights.com/team-
blog/investor-analytics-zombie-venture-capital/) (warning: part informational
and promotional)

~~~
antr
Another great thing about Danielles's post is that this will hopefully
incentivise funds/investors to update their public information on databases
such as CrunchBase. I'm pretty sure some investors are not happy to see their
name on that list, not because they are "zombies" but due to a simple case of
not updating their transactional/deal information.

~~~
loceng
I'm not sure if higher volume of people connecting with VCs is necessarily
their goal - a quality over quantity thing.

~~~
antr
Agree, but public perception is important to most investors.

------
spartango
Interestingly, more than a handful of the funds listed in the list of zombies
are life science and healthcare-related funds.

As someone running a biotech startup, this is rather relevant to me...

It occurs to me that the cutoff of 6 months since last round may be a bit
short for the life science world, where funds tend to make fewer, bigger
investments with lower frequency.

It's also interesting to note that a few strategic venture funds are listed
(Novartis stuck out at me) and that these guys might not fit the same mod,
given that they invest with eye on relevance to the mothership.

With those two caveats in mind, there are also some indicators to suggest that
early stage investing in biotech/life-science startups has been slowing down
over the last few years. There was a big of a boom prior to this, but it's
fairly widely acknowledged that there haven't been good returns for the
billions of dollars poured into early-stage biotech companies. There's now a
bias toward larger series A's on slightly lower risk startups...

~~~
dmor
I would be happy to make you another list that has 12 month cutoff, would that
help? We were discussing last night whether health/biotech funds have a
different cycle than web tech, would love to know your thoughts on that.

------
ChuckMcM
Danielle, I enjoy your posts (and there have been a lot of them on HN of late)
but question how much faith you want to put into Crunchbase. It suffers a bit
from "Wikipedia disease" which is that its sort of self selecting and the
quality of the information in it varies quite a bit. A great place to look for
symptoms but I don't know how much faith you can put in conclusions drawn from
it's data.

~~~
zbruhnke
I can totally vouch for the lack of curating that is done on Crunchbase data
because a couple of months ago I had people congratulating me on the 1.2M seed
round that my startup had raised ... my startup that at the time did not even
exist as a company yet much less had it been looking for investment.

I respect what Danielle is doing and her post have been interesting
lately(leads me to wondering what the pivot for referly is going to be) but I
definitely would not solely get data from places like Crunch base. They have
some competitors out there who curate their data MUCH better but they also
happen to charge for access to it.

------
neurotech1
_In the same way at a VC will often send you to an associate because they’re
“too nice” to say no._

Thats one thing that bothers me in business, is the "social contract" of
avoiding appearing abrasive or aloof, so everyone tells each other white lies
to make everyone feel better. I'm not referring specifically to VCs (I have
almost no experience with VCs). Contrast that with somebody like PG who has a
reputation for being blunt, but also being constructive and generous with his
time.

Accountability belongs on both sides of the table is for everyone's benefit,
and Danielle is right to call attention to this.

~~~
hkmurakami
We're also in a business world where we can't be upfront with our
insecurities, worries, personal failures (unless they somehow lead to you
becoming Herculean thereafter), self-doubt, etc.

No, it is not healthy, and imo it contributes significantly to the detriment
of our mental health.

~~~
rhizome
Business health, however, thrives on information asymmetry. "How the VC really
feels," is just another instance of it.

------
jchonphoenix
The list doesn't seem that accurate. Some of these "VCs" are actually angel
groups that don't do Series A, other than follow ons (Webb Investment
Network).

Others have started Angel funds (Ron Conway) and no longer invest personally.

~~~
arbuge
Then there's outfits like Tiger Global, which doesn't do series A's... and I
have no idea what Charles Schwab is doing on this list.

~~~
dmor
All of this data is from Crunchbase, and the column D "Date of Most Recent
Series A Investment" indicates they participated in the round though they
might not have lead.

~~~
andrewljohnson
You hold up "all this data is from Crunchbase" like it's a shield, and
basically say the same about your Alexa web numbers for YC start-ups - don't
blame me, blame my methodology!

Why not try and come up with a more robust method than pouring over CrunchBase
and appending "Na ni na ni boo boo VCs, if this data is wrong, contact me,"

~~~
dmor
It's not a shield, it's a sign. I'm working with limited public data trying to
create something new and I'm working on improving it but it takes time -
making this post alone was a labor of love and I realize this kind of analysis
still has a long way to go. One of the best ways to get data to make these
lists better has been to publish what is available and get feedback on what is
wrong, where to look, who to ask etc.

When I make these posts suddenly people start returning my emails requesting
data.

It also occurs to me that we have no problem judging and speculating about
startups based on nothing more than a TechCrunch post with extremely limited
public data. It's funny that it is so much less socially acceptable to do this
with investors. Maybe I can change that.

~~~
ganeumann
Going public saying "don't work with these funds" and then telling them you'll
take them off the s!!t list when they share their private data with you sounds
an awful lot like what in other walks of life people would call extortion.

I have a list of everyone who has paid their credit card bills in the last
several months (the list only covers people who live in my apartment.) You are
not on it. Is it okay if I put up a public website calling you a deadbeat? If
you don't want to be on it, just send me a copy of your bank statements.

My firm (Neu Venture Capital) is on the list, despite doing a Series A a few
months ago, a Series B last month, and three seed deals in the last six
months. O'Reilly Alphatech is on there, despite raising a $85 million Fund III
six months ago. Quotidian is doing deals, Chris Sacca is doing deals, etc.
Crunchbase data is incomplete. Saying people have done something based on it
is relatively safe; saying people have not done something based on it is
scurrilous.

[edit: the second paragraph is a hyperbolic analogy. I don't have such a list
and I wouldn't use it that way if I did. That was my point, that it would be
wrong to make that sort of implication based on data you know is incomplete.]

~~~
mindcrime
Comparing this to extortion is quite a bit of hyperbole. You're talking about
one journalist, publishing a list on a website... not a gang of armed thugs
standing in your store going "this sure is a nice shop, would be a real cryin'
shame if sumthin were to happen to it..."

Is dmor asking for money, or trying to strong arm anyone into doing anything?
No, dmor is just reporting based on the information she has available. That it
might be incomplete or inaccurate is worthy of pointing out, but it's a HUGE
stretch to invoke an analogy to extortion.

~~~
ganeumann
<https://yourlogicalfallacyis.com/strawman>

You are misdefining extortion.

~~~
ganeumann
"...but additionally, in its formal definition, means the infliction of
something such as pain and suffering or making somebody endure something
unpleasant." [1]

[1] <http://en.wikipedia.org/wiki/Extortion>, op cit.

~~~
mindcrime
The full sentence from the above quote:

 _Exaction refers not only to extortion or the unlawful demanding and
obtaining of something through force,[1] but additionally, in its formal
definition, means the infliction of something such as pain and suffering or
making somebody endure something unpleasant._

So we've gone from talking about "extortion", a well known criminal offense
with an everyday, commonplace meaning, to quibbling about an alternate
definition of "exaction" which may sometimes be used synonymously with
"extortion". If you meant to specifically talk about "exaction" then why not
say so in the first place?

And in _either_ case, I stand by my assertion that referring to dmor's article
as such is a tremendous exercise in hyperbole.

------
manishsharan
Isn't this like the third blog post from daniellemorril.com within the last 2
weeks making it to HN front page ?

Also -- it seems obvious that while the author has tools to crawl web sites
and pull data into a CSV, it seems dubious that the author spent anytime in
running a manual sanity check before presenting her findings. For example,
"O'Reilly AlphaTech Ventures" and "OReilly Alpha Tech Ventures" are the same
thing.

~~~
dmor
Author here. I have presented Crunchbase data as is without any "cleaning" but
I assure you I have run a sanity check on the companies involved, and emails
are pouring in from founders confirming they have experienced wasted time with
investors on this list. I am happy to de-dupe those two items on the list and
check for others, and will continue to fix any other errors people report.

~~~
codex
Do you think you would get a similar volume of emails if you posted a list of
VCs selected at random? I suspect so. Many are called but few are chosen.

------
klochner
Publishing the list feels unprofessional and manipulative, especially
considering:

> When I make these posts suddenly people start returning my emails requesting
> data.

Even as a causal observer of the VC market, I was able to spot a lot of false
positives in that list.

~~~
gojomo
Often "publish-then-correct" reaches the truth faster, asymptotically, than
waiting to get everything right before publishing.

Call it "Minimum Viable Truthiness", if you'd like.

~~~
klochner
It just felt to me like retribution for this:

<https://news.ycombinator.com/item?id=5491293>

Where I'm guessing that refer.ly is trying to raise their own series a and
possibly getting frustrated.

That said - entrepreneurs should be more concerned with growing a business
than making friends with VCs, so more power to danielle if this is how she
ends up making it work.

~~~
dmor
It's certainly not retribution, I posted that story and I think it's
interesting - and then it turned into a TC story!

Refer.ly recently pivoted - in fact every stat about our business is on the
front page of our site. We aren't raising Series A, we have ~18 months of
runway left at our current burn.

------
orangethirty
Brilliant. Takes guts to call out VCs like this. Now, I don't think your
6-month time period is the right data point to measure if they are a zombie or
not. There are a lot of different reasons why VCs take short investment
breaks, and the 6-month period does not allow for that. I think 18 months is
more in line, because it allows you to see more of the failed investments and
results overall. A zombie VC should be defined with a ratio of failed (money
lost) VS. successful (money gained) deals. If they have a lower than average
ratio then we can say that their confidence (and the confidence of their
bankers) is down, and they are operating in Zombie mode.

But I'm probably wrong, because I am a value investor.

~~~
dmor
I think that is another valuable thing to measure in terms of overall success
and direction the fund is going, and I'd certainly like to. I was hoping this
would help founders who are trying to raise Series A right now figure out
where to focus first - but I agree taking a longer view would give a more
complete picture. It just needs a bit more math and data, but I'm noodling on
it.

~~~
orangethirty
I do agree that it helps, and accomplishes your goal. Though I don't think VCs
will applaud your efforts too much (well, some may). They also go through
slumps, and unlike entrepreneurs, they don't like to talk about it. It hurts
their credibility due to how bankers always want to bet on the lucky horse.

~~~
hippo33
Do we need to pander to VCs? I'm also not sure that your assertion that it
hurts their credibility is true.

Fred Wilson has publicly admitted himself that he hasn't led a deal all year.
I don't think that affects his reputation. If anything, I think people applaud
him for his transparent efforts.

~~~
orangethirty
The VC industry works like stocks. Its more what people are believing than
actual hard numbers. Speculation is the name of the game. And speculation is
driven by hearsay. So, that is why _traction_ is a popular term these days,
and why "founders" hate to talk about actual money earned. You can hear them
say _But with more investment we can get more traction and thus leverage the
market towards using our product._ Which is wall street talk for _We heard
$some_company is going to close a huge deal. We can't say when exactly, but
its going to happen. We want to leverage the current stock price to gain a
couple of extra points when the sale goes through._

Smoke and mirrors.

------
JimWillTri
You're relying on Crunchbase data? It appears (now I could be wrong) that even
the Crunchbase data on your own company is wrong. Crunchbase shows referly
raised $2m. Is that correct? If the Crunchbase data on your own company is
wrong, how can you possibly rely on that data to evaluate other VCs/companies?

------
aviswanathan
I really enjoy these posts by Danielle. For entrepreneurs head-deep in product
and not at the fundraising stage yet, these posts are really informative and
paint a quick picture of the venture scene. Kind of wish there was a dedicated
site that pulled data like this in from Crunchbase, etc. on an ongoing basis
and produced reports/graphs. Side project idea maybe?

~~~
biznickman
I've been building something like that at startupstats.com

------
jpdoctor
> _In the same way at a VC will often send you to an associate because they’re
> “too nice” to say no,_

I'm going to guess that the author has never raised significant money (>$10M)
from VCs. The quoted sentence fragment speaks volumes on a lack of
understanding of the VC animal kingdom.

~~~
tptacek
I don't understand this. I haven't quite raised 10MM in a round at a company I
actually cofounded, but I came close to that number, and that 'dmor sentence
didn't so much ring true as seem banal and obvious. Associates are who you
talk to when VC's want to blow you off. And VC's rarely say no.

~~~
sachinag
I've been an entrepreneur. And I've been the low man on the VC totem pole. If
I'm the only one from my firm at an event or conference, you want to see me.
If you're coming to our offices, you don't.

~~~
tptacek
I mean, I'd want to talk to you at a conference anyways, because you're fun to
talk to. I'm not trying to be dismissive of people who happen to be
associates. :)

------
lquist
Or they aren't interested in the deals/valuations that they're seeing?

As a former investor, an entrepreneur that thinks he/she understands my
business better than I do is a big red flag.

~~~
dpritchett
Kudos to Danielle for trying to pierce the veil. Feel free to challenge her
data and analysis with better data and better analysis.

~~~
obviouslygreen
I guess if that's what you're interested in, this could be what you're looking
for... though this is a lot like picking stocks based on price patterns: It
gives you a phenomenally narrow view based solely on results with absolutely
no insight into how or why things are happening or not happening.

I can see how this information, _were it in any way insightful_ , would be
useful to a lot of people. However, not only are the criteria very arbitrary,
the list is being built from admittedly incomplete and/or incorrect data, and
the opt-out-of-my-public-shaming approach is disingenuous at best.

------
7Figures2Commas
This post merely highlights an important fact many entrepreneurs who are
looking to raise capital ignore: you're not in control of your own destiny. If
you can't move forward in building your business without investor money,
you're forced to spend more time and energy on the fundraising game than
product, sales, marketing, and business development.

The data presented here may or may not be accurate or interesting, and the
conclusions drawn from it may or may not be valid, but regardless, worrying
more about the state of VC firms than your own company is a losing
proposition.

~~~
mindcrime
_...but regardless, worrying more about the state of VC firms than your own
company is a losing proposition._

This, a thousand times this. I know I've ranted about this a lot lately, but I
think (some|many|most) entrepreneurs would be better served to focus on how to
get customers and fund their companies through organic revenue growth, rather
than climbing on the "funding merry-go-round" right away.

------
arbuge
I think it's a major flaw to this analysis that alot of those firms specialize
in non-series A financing and only do occasional series A investments. Calling
them zombie VCs is inaccurate and makes no sense. Examples: SV Angel, Charles
Schwab, Warburg Pincus, Tiger Global, etc.

That, plus the fact that Crunchbase is incomplete to begin with, as others
have pointed out.

------
olivercameron
I'm pretty sure Ron Conway is not a zombie VC.

~~~
dmor
I wouldn't be so sure. In addition to Ron's stats shown on the list, SV Angel
also has not participated in a Series A since January 2013, but was on a
regular 1-2 Series A deal a month pattern before that (in addition to tons of
angel). <http://www.crunchbase.com/financial-organization/sv-angel>

With David Lee moving to LA and Ron Conway much more involved in politics,
I'll be watching

~~~
arbuge
I thought SV Angel does mostly seed rounds, not series A... seems to me alot
of the names on this list are firms that specialize in non-series A deals but
might have occasionally thrown a series A into the mix. Flaw in the
methodology, I think.

~~~
benatkin
> might have occasionally thrown a series A into the mix

dmor said:

> on a regular 1-2 Series A deal a month pattern before that

I think that's enough that it could lead some founders to look to SV Angel for
Series A funding. It may be only a fraction of what they did, but it's still
useful for people to be informed of this, because Ron Conway didn't announce
his intentions in the matter.

------
marcamillion
Danielle, Firstly....you have more balls that many guys I know. Kudos to you
for doing this.

As Obama said, Sunshine is the best form of disinfectant. High time we get a
complete glimpse into the state of VC. Who is bullshitting everybody and who
is not. Who is earning their keep and who is living off the exhorbitant mgmt
fees they charge LPs.

On behalf of all entrepreneuers, thanks for starting that process.

------
HowardMarks
We are seeing more and more Zombie VCs as funds are imploding and partners are
being recycled into new funds. Ultimately, they are investment professionals
such as Samurais are ronins when they loose their master. I think startups
should keep in touch with them because the Zombie VC will reappear either as a
VC or working for a cool internet company.

------
rgrieselhuber
This could be a potentially valuable resource but the definition of zombie
seems to ignore that at least some of the investors on this list do more seed
deals than anything else. It should filter for that appropriately.

------
tylerhwillis
Applaud the effort, despite the data problems. In its current state I consider
it more interesting than useful, but future versions could clearly be
massively useful.

One thought: since many reg d filings are purposefully delayed by 1-2 months
to control timing (and press) it might be more effective to analyze the time
period of 9 mo ago to 3 mo ago.

May also be useful to add levels of caution (yellow is no deals in the 6 mo
period, red is no deals in 12+).

Also, factoring in deviation from normal behavior would be a wonderful
addition (and would remove some of the folks without much data represented)

------
spullara
I'd say that most of the mistakes in this are pointing at Crunchbase not being
updated. Some of these firms in the top 10 have had several investments in the
past 6 months as reported by Techcrunch...

------
SilconValleyVC
In my experience, if you want reliable info (NOT Crunchbase nor companies who
just crawl/spider them and resell it to you, you know who you are right below)
use PrivCo, what I use in VC. It's reliable, confirmed with the VC firms and
the startup founders. Rarely find anything off (crunchbase if way off as all
the HN crew already has figured out).

Just do a search for VC firms and specify what date YOU want their last
investment to be...everyone has different critera. If you think if it's been
more than 6 months it's a "zombie VC" (I personally disagree, because without
getting technical depends on age of the fund...a new 10-year fund invests most
of its money in the first 2 years in a nutshell) then pick 6 months on PrivCo
VC firm search for last investment. If you think it's 12 months search for 12
months. 18 months, search for that. Don't go by this nonsense list with
arbitrary 13 month "cutoff", especially when many of these deals aren't
announced - so they do have deals as evidenced from fellow HN crew discussion
below missing, so the "no deal in 13 months" is wrong to begin with - you need
a dedicated firm like PrivCo (or DowJones VentureSource) to diligently find
those deals day after day. Just 1 missing VC deal for a firm throws off the
entire "13 month zero deals" input there = output worthless.

Long way of saying search for venture capital firms in my humble opinion using
PrivCo and the search criteria: last investment must be within X months, plus
must have made investments in the precise sector you want, etc. Then you get
the results, export to Excel, and it even has updated names and direct emails
of the partners. It's a beauty. Might be others I haven't used too but this is
what I personally use: <http://www.privco.com/investors>

Jake

------
anmol
I wish there was a way this information could be used to update thefunded.com
(assuming they're consistent)

------
codex
This post goes to show why journalistic standards exist, and that bloggers are
not journalists.

------
nivertech
I think there is a market for quantified version of TheFunded.com. But the
data must be much better quality than CrunchBase and curated by ex-VCs and not
by active entrepreneurs.

------
arbuge
Maybe this is evidence of the series A crunch more than it is evidence of
zombies... some of the names on that list are not what you normally think of
in the zombie context.

------
ashbrahma
I don't see how PE firms such as Warburg Pincus/Tiger Global belong on this
list.

~~~
dmor
Warburg Pincus participated in a $26M Series A in CrowdStrike in February
2012. Tiger Global participated in a $10M Series A in BelezanaWeb.com.br in
May 2012 and a $8M Series A in Olacabs in April 2012.

~~~
ios84dev
Have they participated in any more? It seems like one off investments by giant
PE firms probably aren't helpful to any startup that doesn't already have a
personal connection to those firms.

------
pazimzadeh
I love these posts, please keep them coming.

