Forbes Midas list: John Doerr edges Michael Moritz for No.1

The Forbes Midas list of the top 100 investors has just been released.

John Doerr (see his Midas profile), of Kleiner Perkins Caufield and Byers is No. 1 on the list, beating out Michael Moritz (profile), of Sequoia, the winner last year. We’ve posted an overview of the full rankings below.

The two have topped the list both years, due to their investment in the phenomenally successful Google. Doerr and Moritz, along with a third investor Ram Shriram (profile), had the largest stake in that company. Forbes assesses the records of investors over the past five years, and so returns from Google still influences Forbes’ rankings significantly. Moritz won last year, because Atom Entertainment and Red Envelope, two of his other investments, was bought and went public respectively.

However, Doerr beat out Moritz this year because he’s done better recently, according to Forbes’ Erika Brown, who we just got off the phone with. For the first time, she said, Forbes also factors in how much money investor pumped into their deals to get a given return. Before, Forbes had simply measured the size of the company’s exit (acquisition or IPO) with little regard to money pumped in. Turns out Moritz’ Atom Entertainment raised $90 million in venture capital, meaning that its $200 million acquisition by MTV wasn’t that great when compared to other deals. Similarly, Red Envelope raised $110 million, but its public value now is only $33 million. Doerr, meanwhile, saw one of his companies, Tellme, get bought by Microsoft by $800 million.

We should note, there are serious methodology challenges in doing something like this. This is a blunt stab at assessing performance, based on public documents, size of investments and exits, however it’s often unknown at what price an investor bought stock in company and what role he played in a company’s success (did he role up his sleeves, or was it dumb luck, etc?). That said, Forbes appear to be making improvements to its list each year, making it more and more useful.

Other things worth noting in the Midas List package of stories:

–An analysis of the Google holdings by Doerr and Moritz, and how Moritz appear to have held stock slightly longer and thus done somewhat better

–Top healthcare investor is Bryan Roberts of Venrock. According to Forbes: “Three of the first four investments he made after joining venture capital firm Venrock in 1997, when he was just 30, are now public companies with market capitalizations exceeding $1 billion. Two of them went public last year.” Impressive.

–A piece on how big-name investors John Doerr and Vinod Khosla are training their junior partners to invest in clean-tech, and how their backing things like hog waste-to-fuel. Choice quote from Doerr: Training a venture capitalist can be costly; I’d guess up to $30 million of losses.”

–A piece on which VCs are donating to which presidential candidates, and how Obama is the big winner. Draper Fisher Jurvetson’s Tim Draper, traditionally a Republican backer, is spending more on Obama than Republican candidate Mit Romney, even as Draper’ partner Jennifer Fonstad is vice-chairman of Romney’s campaign for women’s issues. Another defection is Ted Dintersmith, of Charles River, a Republican supporter until now, but who is now backing Obama. Doerr, H&Q’s Ta-Lin Hsu and Khosla, meanwhile continue to give the most to PACs.

Finally, here’s Forbes’ note on methodology from last year (because we can’t find one this year; as mentioned above, the only difference this year is that Forbes is starting to look, where possible at the amounts being invested in a deal as well):

A word on our methodology: The Forbes Midas List seeks to identify individuals who deploy venture capital to create wealth for their investors and build valuable, long-lasting companies. Only tech and life sciences companies that have gone public or been acquired within the past five years are considered. Our ranking formula ignores the original amount invested in a deal (as it is often undisclosed), instead weighing most heavily the market capitalization of a venture-backed company on the close of the first day of trading or the final closing price of an acquisition. A lesser weight is given to the change in value of each investment since going public or being sold. Ranking also depends on a candidate’s length of involvement in and depth of influence on a company.

http://content1.docstoc.com/flash/midas100.swf?doc_id=299685Midas List 2008 – Get more free documents