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With billions of dollars at stake, not to mention the egos of thousands of A-typers, it’s no wonder that people are trying to hack the startup investing process for a competitive edge. In what for years was an industry dominated by relationships and gut instinct, investors are now turning to big data to make smarter, more informed decisions.

The latest company to tap into this trend is one created by two former VCs, Sequoia’s Neha Singh and Accel’s Abhishek Goyal, to solve a problem of inefficiency in the venture process with which they’re personally all too familiar. Launching out of beta today, Tracxn is an industry-level research tool designed to help investors track and analyze the entire universe of startups according to their sector.

Historically, if a partner at a firm believes that marketplace-style ecommerce businesses are an opportunity worthy of investment, they need to first map out all the hundreds of startup companies in that particular sector based on their size, stage, performance, capitalization, and dozens of other factors. The investor would then develop a market thesis based on this data and narrow that macro list down to a handful of the most attractive companies to meet with, possibly investing in one or two of them at most.

The problem is, it’s a never-ending process that requires regular updating in order to stay informed on new companies and changes within existing ones. Traxcon aims to automate all of this data-gathering so that investors can focus instead on developing their thesis and meeting with companies. Singh describes it as “Bloomberg plus Gartner for startups.” The platform has been in private beta with 12 venture firms for the last five months, but goes live to the broader public for the first time today.

With 10 million companies being tracked and analyzed, Tracxn’s founders believe that they have built the world’s largest startup database by a factor of 50. The 10-month-old company currently breaks these startups down into 25 macro and micro categories including: Enterprise, which itself contains Security, Storage, Networking, and Mobility; Cloud, which contains, IaaS, PaaS, and SaaS; and Tech, which includes, 3D Printing, IoT, and Payments; Mobile; and several others. The goal is to continue adding both macro categories, like healthcare, approximately every one to three months, and micro categories every week.

Tracxn has built a significant amount of technology to automate tracking the signals around these millions of startups. But the company also employs a team of analysts, each with expertise in and responsibility over a single industry category. These analysts are responsible for organizing the information culled by the system and drawing further insights.

Users of the Tracxn platform get access to a dashboard-like interface that displays high-level data about individual categories. But the more compelling interface, from my perspective, is the semantic search feature that allows users to run queries like {“Bitcoin” + “founded in the last 3 years” + “funded”}. For busy VCs, the time this platform saves will be valued in the billions of dollars.

So with that value proposition as the backdrop, what’s Tracxn cost? The company charges $200 per category per month for access to its platform. Individual users can set up their own accounts to manage custom bookmarks and preferences, but access to categories is priced firm-wide. That means that at present, the most a firm could spend is $5,000 per month (or $60,000 per year, without any volume discounts) for access to the entire Traxcn startup tracking universe. More likely, firms will choose the handful of industries in which they are particularly interested and ignore the rest. At that rate, it’s a rather affordable tool that could easily pay for itself through a single new deal closed.

The real question is, how big is the market opportunity for Tracxn? Globally, there are only a few thousand venture capitalists. Add in hedge funds, private equity funds and a few professional angels who may be willing to splurge on this type of data and the market gets an order of magnitude bigger, but it’s still not massive by any stretch of the imagination. But Singh believes that investors are just the primary market for Tracxn. Secondarily, she believes the platform will appeal to enterprise corporate development and business development departments as well. If that proves out, there are plenty of prospective customers for Tracxn’s service, and with a subscription pricing model, this could turn into a meaningful business.

Mattermark, CB Insights, and even paywalled publisher The Information have proven that the people wearing suits in the startup industry are willing to pay for access to good information that’s been curated and analyzed to make their jobs easier and more efficient. Bloomberg has built a billion dollar business on delivering a similar service to Wall Street. The only questions are, whether the specific information that Tracxn delivers will find the same appetite, and whether the company can get its product in front of the right decision makers to drive adoption.

Singh is betting this won’t be a problem. Currently, she and Abhishek have been doing most of the selling personally. The average subscriber signs up after the first or second meeting, she says. The longer term plan is to build a small-scale version of a traditional enterprise sales team to do the block-and-tackle work of getting Tracxn in front of every venture firm and relevant enterprise company.

Tracxn currently employs 20 people, split evenly between its technology and analyst teams. The company raised an undisclosed sum of seed capital from individual angels, deliberately avoiding taking any institutional money, Singh says, for fear of developing conflicts of interest within its target customer base. But with revenue already flowing in and only conservative growth projections going forward, Singh believes that the company can scale profitably without ever tapping the venture community for investment – she’d rather take their money on subscription.

When it comes time to measure Tracxn’s success, Singh said she will look at what percentage of her clients’ closed deals come from the platform and also these clients’ willingness to continuously add additional categories. One thing she won’t be prioritizing is how much time these users spend in the platform on a daily or weekly basis – the goal, after all, is efficiency, and Singh thinks she can reduce the time required to map an industry from days to hours.

VCs aren’t running non-profits and have proven willing to pay for anything that gives them a competitive edge. Expect a good number of them to pony up to give Tracxn a try. If the platform can deliver as promised and allow them to spend less time researching and more time schmoozing, it will be money well spent.

The venture investing game is changing. Startups may still shuffle their way down Sand Hill road and deals may still close over a cocktail at the Rosewood, but thanks to tools like Tracxn the work occurring behind the scenes to facilitate these meetings is happening more efficiently than ever.

[Image via Startup Threads]

  1. Tracxn!
    Startup information for VCs and Corp Devs
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    At Tracxn, we provide Comprehensive and Curated information about startups and private companies. We cover various sectors like Enterprise Security, Storage, Networking, Payments, SAAS, Consumer Internet, Marketplaces, Internet of Things, Bitcoin, and many more. For a demo, write to us at hi@tracxn.com

    1. Neha Singh
      Founder