For my Master's thesis, I studied the influence of venture capitalists on startups, specifically taking a people-centric network theory approach to study this question. My work revealed insights not only about the influence of venture capitalists, but also more generally regarding various trends of the industry especially regarding gender diversity.
In this thesis, we study the impact of venture capitalists on startup success using social network analysis. Using multiple sources, we compile a unique dataset of 3199 US-based technology startups and their board members, from which we generate and analyze the interlocking directorates network (formal network) and the Twitter activity network (informal network). We define three metrics of success: startup funding (collected from Crunchbase), annual sales (collected from OneSource), and return-on-investment (annual sales / funding). We find that startups with more VCs on their board are more centrally located in the formal network, tend to receive greater funding, have greater annual sales, yet a smaller return-on-investment. We also find that VCs are significantly more central in the Twitter network than non-VCs, and they have greater Twitter popularity (number of followers / number of people you follow). Interestingly, VCs tweet significantly less than non-VCs. Our results indicate that VCs carry a significant amount of capital, both financial as well as socially, which they transmit to the startups they become involved with, however their active participation on the boards of startups leads to lower ROI. Additionally, because the dataset we collected allowed us to investigate a number of more general questions, in this thesis we also explore questions related to: the gender diversity of board membership, number of founders, geographic location, industry specialization, and relationship of schooling and social prominence on wealth.
Full thesis pending release.
The Thesis Experience
The Master's program I completed at MIT provided me with great flexibility regarding thesis topic. Having just completed a year working abroad in the domain of innovation and technology, I was especially enthusiastic to find a project that would expose me to business analytics and prepare me for a career in data science. Hence, I chose to work with the MIT Center for Collective Intelligence, a research center at MIT dedicated to understanding how people and computers can be connected so that—collectively—they act more intelligently than any person, group, or computer has ever done before. I was extremely fortunate to be advised by Peter Gloor, a research scientist at the center, as well as Stephanie Woerner, a researcher at MIT’s Center for Information Systems. I enjoyed discussing my work with fellow members of Peter's group, especially Yuhong Zhou, a visiting scholar at CCI. Overall I appreciated the experience of working on a thesis project and truly understanding what it means to conduct research in an academic institution.
"Beth did a fantastic job, definately in the top percentile of the theses I have supervised"
Peter Gloor, supervisor
Peter Gloor and Stephanie Woerner
October 2016 - May 2017
Data science, statistics, R, excel, python, analytics