A Crunchbase Crash Course

By Paul Greenham for Zirra

When you’re doing a cursory search on a company, one of the first ports of call is almost always Crunchbase. This online searchable database holds business intelligence on over 100,000 companies worldwide. In their completely unbiased self-assessment, they describe themselves as “the master record of data on the world’s most innovative companies.”

Now, you can probably glean basic info from the company’s website or LinkedIn page, such as location, company name (which you should probably have figured out by this stage), industry, year founded, leadership team, and social media links. But a surprising number of companies do not volunteer even this basic data. And, even without a basic subscription or Crunchbase Pro, you can get highly useful information on a company’s total funding and funding rounds, acquisition activity, and direct access to relevant news articles. It gives you a good foundation before you take a deeper dive.

Take SoftWheel for example, an Israeli startup that’s designed an innovative wheel with the suspension system contained within the wheel itself.

Cruchbase tells us that SoftWheel is based in Tel Aviv, Israel, was founded in 2011, and has 11–50 employees. We also learn that they’ve raised $15 million thus far and are at a fairly progressed funding stage (Series C).

One small and seemingly insignificant piece of information is their operating status: Active. This feature can be especially useful when investigating a company’s founders, and used in conjunction with LinkedIn. Founders often list previously founded companies, but decline to state whether the company is still running. Crunchbase can be a quick fact checker for investigating that “serial entrepreneur” whose 20 former companies mysteriously lack celebrations of their illustrious exits. Crunchbase can tell you whether they were acquired, are still active, or inhabit the ignominious graveyard of the “inactive” operating status.

Getting back to SoftWheel, we could also take Crunchbase’s basic description of the company, but since these seem blatantly lifted from the company’s website or other promotional material, we would be well-advised to form our own opinion.

Perhaps, “SoftWheel designs and produces an innovative wheel for enhanced user experience” seems a little less partial.

Next up, Crunchbase tells us the company’s investment history:

This is the real gem of the platform. Crunchbase lists all the company’s funding rounds, dates, money raised and sums the data for a total to-date funding amount. Clicking on the transaction

shows a page devoted to the investment (or acquisition, if the company has ever acquired, or been acquired by, another company), and the relevant news article(s).

This overview often lists the investors, with links to investor profile pages and a summary of all their investments, forming a web of connections across the VC world. Crunchbase’s basic financial data has obvious applications for determining company stage, valuations, exit chances, future investment partners, and other factors, and the data is fairly reliable.

However, you need to do your homework. In SoftWheel’s case, the news article points to a funding round in May 2017 that raised $10 million, not the $15 million declared in Crunchbase’s funding rounds summary. Closer investigation (clicking on the article) reveals that the $10 million round is in fact the company’s third round, and brought their total to $15 million. So at least the total amount was accurate. But what about those first two rounds? Well, Crunchbase is a good start — it got us to the article and to two significant figures ($10 million in the 3rd round and $15 million total), but this is as far as it takes us. I suppose there’s still work for us analysts after all.

(Since you’re on the edge of your seat regarding SoftWheel’s funding history, rest assured that further research reveals a Seed round soon after their founding in 2011 and an undisclosed Series A financing round in 2014 — which, through the application of highly complicated mathematics, can be estimated at a combined amount of around $5 million).

That same mixture of useful but-only-as-a-starting-point information holds for the rest of Crunchbase’s company info. Their team section often has some but not all the founders and/or leadership (and sometimes lists summer interns alongside CTOs). Their News & Activity section generally gives relevant articles, but is far from exhaustive.

This is par for the course with AI and community-sourced data. As stated in their About Us section, Crunchbase relies on a “community of contributors”, a “venture partner network”, and “in-house data teams armed with powerful machine learning.” Crunchbase also seems specifically angled at startups and has a bias towards the Anglophone world. They have a surprising number of non-Anglo companies in their database, but if the company is not public, not a startup/actively seeking funding, and not North American/British, you are often unable to find it (moreso if it is also fairly small).

Nonetheless, Crunchbase is an exceptionally useful tool for the beginning process of company analysis. It gets you on the right path and frequently provides the data needed for essential insights. There’s more to learn from the platform, as well as a host of analytics available via paid subscription. But that’s an article for another day.

Clear, structured, alternative data-driven insights, purposefully built to improve your alpha and risk exposure.