68. The Bloomberg for Private Companies, Part 2 (Anand Sanwal)

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Today we cover Part 2 of The Bloomberg for Private Companies with Anand Sanwal of CB Insights. In this segment we address:

  • Sanwal Startups CBInsights Bloomberg for Private CompaniesWe hear people say that they invest in marketplaces, education, drones, healthcare, IoT, SaaS, machine learning, etc… all in the same breath. Some classify them as sectors, others talk about horizontal themes. Clearly, something like SaaS is more of a business model than a sector. At CBInsights, how do you think about these categories and structure the data in a way that you’re not mixing apples and oranges?
  • Last year you received $1.15M from the National Science Foundation for the launch of Mosaic. Can you tell us what Mosaic is and how you obtained the NSF funding?
  • How do you measure if your tools are helping your customers win?
  • We’ve talked a lot about startups but how can the data and platform provide value for other industries and customer segments?
  • If I’m a VC, why am I using CBInsights instead of one of the other major data players in the space?

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Key Takeaways:


1- The Three G’s of decision-making

Early-on in Anand’s career, he noticed the three primary ways big corporations were making decisions… Gut instinct, Google searches or guys with MBAs. And these methods were being used for big decisions like who should we acquire, what industries should we go after, what are our competitors up to. And none of the three are a scalable, repeatable, process-driven approach to decision-making. Clearly the best investors, like Sequoia, are not shooting from the hip but rather employing a methodical and repeatable process to finding and analyzing startups. And one of the benefits of a centralized source of high-quality data on private companies is that smart individuals can focus on data insight, instead of data acquisition. Anand said: “Many of our users are analysts and we actually get them doing analysis versus just excel jockeying and trolling around on the web looking for data points to drop into a spreadsheet.”

2- Life Events & Signals

A cogent point from Anand was that everyone focuses on the financing and exit for startups, but those are just two life events. CB Insights is perpetually gathering signals and looks at all of the life events of a company. Examples of signals tha they measure included:
Customer and Partner signings, press, volume of social media activity, sentiment of social media activity, web traffic, mobile app data and turnover. And even more specifically they monitor if the VP of Sales is turning over every quarter. It’s clearly a bad sign, but to the untrained, eye, that may look like the company is hiring high-level sales talent at aggressive levels. On the positive side, examples such as hiring a CFO, head of HR and lots of sales people serve as positive signals that occur when a company is growing in a healthy and sustainable way.

3- The Three M’s of Data

With the CBInsights development of Mosaic, they are fundamentally analyzing data in three areas… Momentum, Market and Money. On momentum, how fast is the company growing and scaling relative to it’s counterparts. On Market, is the company in a sector or area that’s attractive and outpacing that of other segments. Here Anand cited the flash payments sector which is a particularly tough area to be in at the moment, which can significantly impact the downstream ability to attract more capital, despite very strong core business metrics. And finally, he spoke about money. What’s the startup’s burn rate, how much runway does it have and who did it raise from. Clearly a capital raise form Sequoia is going to provide greater opportunity for a young company than 99% of the other venture firms out there.

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