How Often Do VCs Collaborate With Each Other? The Data Tells The Tale.

“Coopetition”. It’s a blended word: cooperation and competition. We use this term when describing how VC firms work together. In one investment opportunity, a firm may be competing head-to-head with opposing term sheets, and in another, they team up as co-investors to help the company succeed.

This got us thinking, how often do VCs actually collaborate on an investment, and how does this differ by geography, stage, or sector?

So, in search of the truth, this week we dug into our proprietary dataset and analyzed over 240,000 rounds from around the world. To make sure the analysis is relevant and informative to current entrepreneurs and VCs, we limited our output to rounds that were executed within the last 5 years (2014-2018). We focused on VC round stages Seed to Series D.

Here’s what we discovered

Even though last week’s post showed VC Ownership Percentage is on a downward trend, we still see that the average startup round (Seed-Series D) has about 1.8 VCs investing.

We also found that, as expected, the average number of VC Firms in a round tended to increase as the startup matured with more and more financings.

Perhaps most interesting to us, we found that the average startup round in the United States had considerably more VC collaboration than other areas of the world.

Finally, if you’d like a more detailed view, we took all of the above and put it in a single chart:

What do you think has caused VC in the United States to have more VC Firms per round than other areas of the world?

After analyzing this data, here are some hypotheses we have that we may try to test in future posts:

  • Potentially more VC firms per startup in the US resulting in more VC firm options.
  • Potentially more international firms entering the US venture market.
  • Potentially higher US valuations and thus higher amounts raised resulting in more room for additional investors.
  • Companies in the US staying private longer and thus raising more and more rounds with less dilution per round.
  • Companies in the US could be seeking more investor diversification on their cap table  
  • Potentially more co-investment firms that are not required to lead a round in the US than other places.

I’d love to hear your thoughts on why there are more VC Firms per round in the US than elsewhere.

Reach out and chat with me (Collin West) on LinkedIn, Twitter, and especially in the comments section below for Q&A.

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