In this age of disintermediation, when middle men of all kinds are rendered increasingly irrelevant by online technology, it seems only fair that the same force takes aim at the people who helped finance the Internet’s spread: venture capitalists.
YouNoodle, the San Francisco startup that last year launched an online crystal ball of sorts that uses algorithms of such factors as the education and professional networks of a startups’ founders to come up with a valuation for it in three years, has added another tool to its arsenal: a ranking of over 25,000 startup businesses by “how much buzz they are generating”, according to a report by Kristina Grifantini in MIT’s Technology Review Thursday.
Leading the list are well-known social networking sites Facebook and LinkedIn. Companies that have jumped up the rankings over the past month include Care.com, a source for local caregivers; Reply.com, a place to buy or sell online clicks; and Quantcast.com, a site that generates statistics of websites’ traffic. One of the biggest movers is the PowerPoint-presentation-sharing site SlideShare.
The notion that a software program could do the same job as an experienced venture capitalist was met with skepticism from some observers, reports Grifantini, who spoke with Josh Lerner, a professor at Harvard Business School. The professor, who has published research showing that an entrepreneur’s second startup has slightly better odds of succeeding than her first, suggests “there are definitely patterns out there that work.”
Lerner is cautious, though, about relying on prediction tools, saying “it’s hard for me to believe there isn’t an important element of randomness that constitutes a successful entrepreneurial venture.”