European data start-up and venture capital firm Dealroom has raised a €6 million Series A funding round.
The company’s new capital comes almost two years after raising €2.75 million in early 2020. Its database competes with a number of competitors 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 had previously invested in the company.
Business Is Business
The startup collects data on private companies through public scraping and partnerships. The resulting data is then processed and run through the company’s software to, as Dealroom puts it, “make real predictions.”
So, the trading center consists of three interconnected parts: data collection, cleaning and synthesis.
You can see why more capital is needed to keep up with the huge influx of financial events flooding the world. In fact, companies like Dealroom are having to experience something like boom times for themselves. Their core market mandate, the private enterprise landscape, is expanding rapidly leaving many in the startup game dormant. So Dealroom has a lot to do and lots of people to sell it to.
The company’s business makes money in a variety of ways, including providing APIs to business and government customers and selling access to its SaaS-based platform. The company also conducts customer research. According to Wijngaarde, it has 50 public API customers who “represent about a third of Dealroom’s revenue.”
More broadly, “the company’s revenue structure is roughly the same in three parts for investors, B2B companies and the government,” the CEO said. So there isn’t a single leg on the Dealroom stool; Three different groups buy what he has to offer.
Coming back to our moment of what looks like a strong moment for Dealroom and its global competitors — Crunchbase says it will hit around $38 million this year — the fact that governments are taking such a large chunk of Dealroom’s revenue , appears remarkable and optimistic. Governments are paying attention to the startup game as it spreads more evenly around the world, and are willing to spend money to better understand their local market and, we suspect, the people around them.
Why has his company only raised 6 million euros in capital? This is a modest round in today’s market!
The CEO said that Dealroom “calculated” its new round based on both the “needs of the company” and the fact that it “didn’t want to get too far ahead”. [self] based on the availability of capital.” The founder added that Dealroom is “fortunate to have booming earnings coupled with healthy capital efficiency,” two things that will reduce the need for additional capital, and therefore dilution, in the near term .
What Is the Next Step?
Dealroom, Crunchbase and others in the data game are pretty good at handling data – have data, collect data, get the picture. What dealroom data room wants to do with its data in the future is work with it smarter. When asked what the future holds for his company, Wingaarde said he is focused on expanding the platform’s predictive ability to help our clients find promising companies at an earlier stage.
If he succeeds, the company can at least raise its dealroom pricing for investors by zero. Another company I worked for, Mattermark, wanted to do something similar. This is a large and complex problem that requires oceans of accurate up-to-the-minute data.
Before we continue, let’s try to better understand a specific mechanism in the data collection business. So we asked Dealroom whether data collection and maintenance would be treated as a cost of sales or a marketing operational cost. Weingaarde replied as follows:
We account for data collection partly as cost of sales and partly as product development in cost of operations. We also do a lot of human led research which is considered a cost of selling but can also be considered a cost of marketing as it leads to a lot of content marketing.
It turns out the answer is both. I want to understand this combination better, and I’m sure we’ll get a better understanding when one of the companies in the private market data business goes public.