Matching Startup Founders to Investors: a Tool and a Study

TL;DR

This paper introduces a tool for startup-founder and investor matching, analyzes its data to understand venture financing, and studies social attributes influencing successful fundraising efforts.

Contribution

It presents VCWiz, a novel matching tool, and provides quantitative insights into startup-investor interactions and social factors affecting fundraising success.

Findings

VCWiz improves matching efficiency and fairness

Characteristics of successful funding rounds are identified

Social attributes influence fundraising success

Abstract

The process of matching startup founders with venture capital investors is a necessary first step for many modern technology companies, yet there have been few attempts to study the characteristics of the two parties and their interactions. Surprisingly little has been shown quantitatively about the process, and many of the common assumptions are based on anecdotal evidence. In this thesis, we aim to learn more about the matching component of the startup fundraising process. We begin with a tool (VCWiz), created from the current set of best-practices to help inexperienced founders navigate the founder-investor matching process. The goal of this tool is to increase efficiency and equitability, while collecting data to inform further studies. We use this data, combined with public data on venture investments in the USA, to draw conclusions about the characteristics of venture financing rounds. Finally, we explore the communication data contributed to the tool by founders who are actively fundraising, and use it to learn which social attributes are most beneficial for individuals to possess when soliciting investments.