Infographic Should the ‘Jockey’ Come Before the ‘Horse’?

Picking winners, especially among early-stage startups, is a challenge for venture capital investors. Should they bet on founders with impressive credentials (the “jockeys”), or focus on the strength of the products and markets (the “horses”)? Research by Penn State University’s Young Soo Jang and Chicago Booth’s Steve Kaplan suggests that VCs may have a blind spot—a tendency to place too much weight on founding teams.

The researchers, analyzing internal decisions made between 2015 and 2021 at a representative US VC firm, got a rare look into how a VC sources, scores, and selects startups. They find that while the firm was good at spotting which companies would gain traction (by raising at least $1 million), it may have missed some startups with the greatest potential for long-term success. That’s because product and market—rather than the founding team—were the best predictors of sustained growth, the research finds. By placing somewhat less emphasis on the jockey and more weight on the horse, a VC could improve its chances of backing future superstars.