Fri. Jan 21st, 2022

European startup and venture capital data firm Dealroom has raised a €6 million Series A, it told BestFitnessBands.

The company’s new capital comes almost two years after it raised €2.75 million in early 2020. The database competes with a number of rivals in North America, including PitchBook, CB Insights, and my former employer Crunchbase.

Beringea led Series A, which also included Knight Venture Capital and Shoe Investments, companies that previously invested in the company. To better understand the roundup, BestFitnessBands asked the Dealroom founder and CEO a series of questions Yoram Vineyard.

Business of Dealroom

The startup collects data on private market companies through public scraping and partnerships. Then the resulting data is cleaned and run through the company’s software to “discover actionable predictions,” as Dealroom puts it.

Dealroom therefore consists of three linked parts: data collection, cleaning and synthesis.

You can see why it might want more capital to handle the massive influx of financing events that are sweeping the world. Indeed, companies like Dealroom should be enjoying something akin to heyday. Their core business, the private business landscape, is expanding rapidly and many participants in the startup game are alike. So Dealroom has a lot of work to do – and a lot of people to sell it to.

The company’s business makes money in a few ways, including providing an API for both corporate and government customers and selling access to its platform on a SaaS basis. The company also conducts customer research. Per Wijngaarde, it has 50 government API customers who together make up “about a third of” [Dealroom] income.”

More broadly, the company’s “revenue mix consists of roughly three parts between investors, B2B companies and governments,” the CEO said. So there’s not a single leg on Dealroom’s revenue crutch; three different groups buy what it has to offer.

Coming back to our point that it seems like a strong moment for Dealroom and its global rivals – Crunchbase says it will hit about $38 million ARR this year – the fact that governments make up such a large share of Dealroom’s revenue feels remarkable and optimistic. Governments are paying attention to the startup game because it is spreading more evenly around the world, and are willing to spend money to better understand their local market and, we assume, the people around them.

On the capital front, BestFitnessBands asked Wijngaarde why his company raised only $6 million. In the current market that is a modest round!

The CEO said Dealroom “tuned” its new round around both “business needs” and the fact that it “didn’t want to get too far ahead of the game.” [itself] based on the availability of capital.” The founder added that Dealroom is also “happy to have strong sales growth coupled with healthy capital efficiency,” two things that would reduce a short-term need for more capital and thus dilution.

What’s next?

Dealroom, Crunchbase and others in the data game are pretty good about data – having data, collecting data, you get the idea. What Dealroom wants to do with its data in the future is to tinker with it smarter. Asked what his company will do next, Wijngaarde said it is “focused on increasing the predictive power of the platform, to help our customers discover promising companies at an increasingly early stage.”

If it can, the company can add a zero to its pricing page, at least for investors. Mattermark, another company I worked for, wanted to build something similar. It’s a big, difficult problem, requiring oceans of accurate, down-to-the-minute data.

Before we go too far, BestFitnessBands wanted to better understand a particular mechanic in the data collection. So we asked Dealroom whether data collection and management counts as a cost of revenue or as an operational cost for marketing. This is what Wijngaarde wrote back:

We count data collection partly as a cost of revenue and partly as product development [operating expenses]. We also do a lot of people-led research, which is counted as a cost of revenue, but can also be thought of as a cost of marketing because it results in a lot of content marketing.

The answer is both, it turns out. I want to better understand that mix, and I’m sure we’ll get a better understanding when one of the private-market companies makes data files public.

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