SAN MATEO, CA - Marketocracy, Inc., an investment management and research firm, today announced that U.S. Venture Partners (USVP) has invested in the company’s Series D round of financing. USVP joins lead investor Formative Ventures in this financing, signifying an endorsement by the venture industry of Marketocracy’s pioneering “Team Investing” process that seeks to consistently beat the stock market by adapting as the market changes. Marketocracy has raised approximately $13M to date, and this $2M round enables the company to stage the next phase of growth towards profitability.

“VCs have historically been very selective in investing in this industry because investment firms are usually dependent upon the talent of a few individuals,” explained Tim Connors, General Partner at USVP. “We like Marketocracy’s unique investment process because we believe it is repeatable and sustainable as it is designed to adapt as the market changes. Marketocracy harnesses the investing experience of an extremely large pool of talented investors, so their investment performance is not dependent on any one manager. Underperforming managers are replaced with those demonstrating better investing talent for the current market, creating the ultimate meritocracy.”

Marketocracy has developed an online virtual stock trading system that has attracted a “farm system” of over 70,000 investors from every state and over 75 countries to manage model stock portfolios at www.marketocracy.com. Marketocracy has been tracking their virtual trading activity for over four years, and has accumulated a massive database by monitoring over 12,000 stock positions and over 5 million trades. This system leverages the efficiencies of the Internet to enable them to track an unlimited number of stock portfolios in a very scalable manner.

Using an in-house, patent-pending performance measurement process, Marketocracy identifies the best and most skilled model portfolio managers – thousands of them to date – giving them a deep bench of talent from which to select. From this pool, Marketocracy then creates the m100 index, which is based on the 100 best-performing managers for the current market. Since its inception in 2001, the m100 Index has a success ratio of beating the S&P 500 Index 95% of the time for any one-year period.

Ken Kam, CEO and founder of Marketocracy, said, “We leverage the investment research based on the m100 to manage a family of investment products. As we approach the next phase of our company’s growth, when our investment product nears its three-year anniversary and receives a Morningstar ranking, we are very pleased to bring in an esteemed investor like USVP to extend our message to the institutional and financial advisor marketplace.”

“Several venture-backed companies have tried to use internet-based technology to gather investment research,” explained Clint Chao, General Partner of Formative Ventures, a returning investor that led Marketocracy’s Series D round of financing. “The difference in Marketocracy’s business model is that its rigorous process for identifying and leveraging investment talent is based on Ken Kam’s expertise as one of the country’s top portfolio managers and because they use this research to manage real money. They successfully bolster the ‘old world’ business model of managing money with the efficiencies and scalability of ‘new world’ technology, making this a very compelling investment opportunity.”