Venture Scanner

Which Sectors are Poised for Growth?

At Venture Scanner, we provide coverage on emerging sectors that have momentum in innovation and startup activity. These are the sectors that are transforming established industries or creating new ones. They are sectors that attract venture capital and corporate strategic interests.I analyzed all the sectors we are covering and looked at the total companies within the sectors and the percentage of those companies that have been funded.Broadly, I see 3 groups amongst these sectors.Group 1: Bitcoin and 3D Printing have limited funding activity and there are likely opportunities for continued early stage investments as the companies reach product market fits. Group 2: Connected Transportation, Marketing Automation, IoT, and Financial Technology have gained traction with investors and are building out their respective industries. These sectors seem poised to attract later stage investments and M&A activity, along with continued early stage opportunities. Group 3: Retail Technologies, Future of TV / Video, and Digital Health seem ripe for M&A activity and later stage investments. What do you conclude from this data?Nader

Evaluating and Scoring Companies: Analyst vs. Crowd vs. Programmatic

External company evaluations and scores can help buyers and dealmakers narrow the field when assessing vendors or deal prospects, especially as the pool of available opportunities only grows.I see 3 approaches being used, and will offer my thoughts on each method below:Analyst evaluationCrowd evaluationProgrammatic evaluation1) Analyst evaluations are the bailiwick of research shops whose analysts look at a sector and use a specific evaluation rubric to classify companies. For example, Gartner uses the magic quadrant methodology, where analysts evaluate companies based on completeness of vision on the X-axis and the ability to execute on the Y-axis. They then group companies into leaders, challengers, niche players, or visionaries (see figure below).Pros: Analysts conduct primary research, talk to companies, and dig through operational details to synthesize a large amount of non-public data to form opinions.Cons: Analyst evaluations can be subjective and biased based on the relationship a vendor has with the analyst and can also be very limited as analysts do not have the bandwidth to cover all the up and coming entrants in any given sector. 2) Crowd evaluations use the power of the open web to enable the wisdom of the crowds to score individual companies. For example, ProductHunt uses a simple Reddit like model that allows their community to list and up-vote companies. Companies receiving the lion’s share of up-votes in any given sector are the presumed leaders in a particular sector.Pros: Crowd evaluations democratize scoring and can signal which companies have a high likelihood of pleasing customers. Cons: Crowd evaluations are broad in nature and don’t determine the fit of a company against specific customer needs, nor do they evaluate a company based on their operations and strategy.3) Programmatic evaluations use algorithms that take in available data from the web to determine an overall score for a particular company. For example, Mattermark uses week-to-week growth data on a company’s web traffic, mobile downloads, inbound links, Twitter followers, Facebook page likes, and LinkedIn followers to arrive at an overall score for the company.Pros:  Programmatic approaches that leverage available public data can be a good signal for companies that are showing growth and can help buyers and investors find up and coming opportunities.Cons: The flip side is that programmatic approaches can favor socially trending companies versus companies that have a stable offering and an existing base of customers. Furthermore, they do not evaluate companies based on any specific customer needs, nor do they take into account a company’s overalls strategy and ability to execute.Ultimately, each of these approaches provides part of the solution, and at Venture Scanner we believe the final answer lies at the intersection of all these approaches. Our approach of “analyst coverage as a service” combines a sector analyst’s primary research with aggregated and synthesized data from the web to provide our customers with the necessary insights to make a decision. Are there other approaches or pros/cons that I’m missing?Nader

Insights make all the difference

“Venture Scanner’s insights help us make sense of emerging sectors and zero in on opportunities.” Duncan Davidson, Managing Director at Bullpen CapitalAt Venture Scanner, we pride ourselves on our analyst insights. While we think of ourselves as a technology company and are reinventing the analyst coverage industry from the ground up with data, technology, and workflows, we ultimately see our analyst insights as the determining factor when our customers make decisions. Whether it is a CIO or CMO making a key purchasing or partnership decision, or a VC making an investment decision, or a corporate development executive making an acquisition decision, in all these cases the determining factor has been the insights on top of the data and companies our technology has aggregated, clustered, and organized.Our technology enables our analysts to surface companies in sectors and assess how companies are performing based on available social, traction, and financing data, but to truly cut through the noise our analysts immerse themselves in the sectors we cover and gather firsthand intelligence. The amount of publicly available data on private companies is very limited, and the earlier stage the company, the more finite that data set is. Many times the data set available is limited to what the companies themselves have uploaded on properties like AngelList, traffic or app data from services like Compete, and social data from Twitter. There are also crowd signals from products like ProductHunt that we factor in. However, while the sum of all this publicly available data might give us an okay first approximation of what companies might be trending, it certainly does not provide the insight to make a purchasing, investing, or acquisition decision where significant sums of money are at stake.Such decisions require actionable insights. In order to provide insightful and actionable intelligence to our customers, we organize our operations around domain experts who play the role of sector analysts. Our sector analysts spend their days fully immersed in the sectors they cover through the following activities:Product Lens: Creating trial accounts in the companies within their sectors, using the products, and determining unique differentiators, strengths, and weakness for said products.Primary Research: Meeting one-on-one with companies within their sectors to understand strategic direction, key feature releases on the horizon, and operating metrics.Trend Identification: Attending sector focused events/meetups and meeting with VCs investing in their sectors to catch emerging trends.The sum of all this gives our sector analysts the raw ingredients to form actionable insights for our customers. These include defining the unique drivers of each category of companies and highlighting the companies that are exhibiting them, compiling feature and usability comparisons amongst the companies within a category, and stating the key assumptions within a category that will determine future growth.So, while unearthing the data on private companies through our technology provides the starting point for making sense of any given sector, category, or company, the final answer lies in insights. Give our analyst insights a try, contact me at [email protected] or 650-218-0067.Nader

Announcing On-Demand Diligence

While most of you know us for our ongoing coverage of emerging sectors through our subscription scans to the Financial Technology, Internet of Things, Digital Health, and many other sectors, we have quietly started a new service.

How can startups and entrepreneurs gain an unfair advantage with Venture Scanner?

"Developing a deeper understanding of the IoT domain and ecosystem through Venture Scanner gave me a leg up when I started my company." Atif Noori, Founder & CEO, emberlight

UPDATE: Retail online to offline

In the time that I have been tracking the retail online to offline space at Venture Scanner, I am even more convinced that startups in this sector are among the most exciting and innovative. With the most up-to-date one-pager below, it is easy to see the breadth of categories covered as well as the investor interest.

Does R&D Spending Correlate to Innovation?

I came across some very insightful data flipping through Evangelos Simoudis’ slide deck on Corporate Innovation.

Competitive Analysis in Venture Capital Diligence: Introduction

James Conlon is a co-founder of Venture Scanner and Partner at Bullpen Capital

Deal Discovery Is a Process

May the Right Company Win the Deal

A couple years ago after Autodesk purchased short form video creation app Socialcam, my co-founder Jereme Monteau and I asked each other why Socialcam out of all the other video creation apps? Was Socialcam the best fit for Autodesk’s strategic needs? It may very well have been the best fit for Autodesk’s needs, but we wondered if Autodesk acted with a full understanding of the video creation category.