By Casey Rovinelli, Growth Director, OMERS Ventures
So the secret is out.
VC firms are using data engineering /data science to chew through alternative data sources to find new companies to invest in.
There has been a noticeable uptick in content on the subject (for example, here, here & here). Most of these articles feature some pretty interesting data projects with lofty project names like Motherbrain, Beacon, Voyager, Epsilon & XGBoost. All focused on delivering better, faster signals to spot promising companies, using existing data.
This increase in attention is likely behind the inquiries I’ve been getting from some of our portfolio founders around how they can tap into this new approach to deal sourcing by creating signals of their own.
It’s the kind of question I live for.
At OMERS Ventures I’ve been on a 2 year journey building internal products and leveraging data to support our investment process. Given an audience, I’m more than happy to talk about what we look for and how we look for it. My hope is that this insider’s look will help founders have more ownership over their own digital signals and can take an active role in getting themselves on the radar.
How to ‘engineer’ your way onto a VC’s radar
While there are loads of (temporary) ways to hack your way to a top search result, the reality is that SEO shortcuts are unreliable and easy to spot.
The first piece of advice I’d give to startups looking to create more signals is to think of it as a search engine optimization exercise, and the best way to increase your rank in search is to produce high-quality content that is relevant to your target audience. So to start, make sure your team is publishing content on relevant channels in areas with a large market potential.
Once your content engine is running, here are some high-impact tips to make sure you appear in the data signals of VC’s you want to be noticed by.
Tips to make sure you appear in VC’s deal sourcing signals
It’s important to make sure VCs see that “things are happening” at your startup. Traffic is rising, people are talking about you, your team is growing, etc etc. Activity is a sign of life and growth — and that’s a big part of what VC data models are looking for. So it’s important that this data is easy to find.
First let’s start with the basics. Making sure you are visible to VCs where they are hanging out online.
Crunchbase & Pitchbook
The two industry standards for startup information are Crunchbase and Pitchbook. Make sure your company and financing information is correct and up to date.
If you have some influential investors, make sure they are correctly tagged. On Crunchbase*, you can also now self-identify with any diversity ‘tags’.
While anyone can edit Crunchbase, you should take control of your company account to make sure edits are updated to your liking. (Crunchbase: Manage My Company).
The lesser known Pitchbook is a subscription-only database used by many investors. Similar to Crunchbase, you’re going to want to make sure your information is up to date. You can request your profile here (Pitchbook: Request your profile). If you see any discrepancies, you can ask them to be corrected. Note: your investor should also be able to help you out with this.
VCs are known to hang around on Twitter quite a bit. (Maybe too much?)
They are also well known for asking the Twitterverse about the “hottest companies that do X”. You should make sure you appear in these lists. Setup an automated search for your sector to make sure you are responding to these requests. Even better, have people proactively recommend you.
VCs LOVE market maps. Both making them and consuming them. If you can get yourself included in any industry analyst content related to your sector, it will pay dividends.
If a VC does include you in a market analysis publicly, share it far and wide through your own channels. It’s a strong signal to other VCs that their competitors have you on their radar.
Your website is a critical asset for telling the story of your business. In addition to making a first impression, VCs are looking to get a few data points from your website. How do you describe your company (what do you do, what industry are you in?) What’s your business model (SaaS, marketplace, Ecommerce etc)? What is the call to action (free trial, signup etc)? Do you have a diverse leadership team? Where are you located?
Increasingly VCs (and data providers that VCs use) are scraping your website to get this information. So make sure your website uses all the proper web standards and is SEO-friendly.
Make sure the top half of your website gives a solid first impression. In addition to helping make a good first impression, often, a screenshot of your homepage will appear on a VC dashboard. Say cheese!
Lastly, focus on getting web traffic up a few months in advance of a fundraise. It’s common practice for VCs to purchase web traffic analytics and mobile app engagement data looking for those companies having a breakout moment.
And finally… LinkedIn. It’s not just for reading how honored / humbled / proud people are of their latest achievement, it’s also a great place for VCs to track movements of people. :)
A common practice is for VCs to keep a (very, very close) eye on LinkedIn to see senior people leaving big-tech companies for startups. It’s a good signal that senior people are willing to give up their good paying jobs to join a startup. VCs are also often looking at employee headcount growth on LinkedIn as a way to infer traction.
To make sure your company is reflected correctly on LinkedIn, make sure you have a company page and that all of your employees are linking to it. If you are poised to hire a few impressive new additions to your team, you might want to think strategically about when they should update their LinkedIn profiles.
Do the basics brilliantly
Every VC looks at data a little differently. While it’s hard to try and “game” their sourcing systems, you should definitely make sure that your company’s successes and traction are reflected online. Better data = better outcomes.
Do the basics brilliantly. Treat all of these ideas appropriately for your own business, but know that if you tick all these boxes, especially in today’s market, you will attract interest. And when you attract interest, people talk about you. And the more people talk about you, the more interest you attract. You see where this is going?
Thanks for reading. Happy New Year & good luck out there!
*Crunchbase is an OMERS Ventures portfolio company