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Mattermark Aims to Revolutionize How VCs Invest in Startups

In a previous article, we profiled a very interesting startup called Mattermark, which aims to bring big data analytics to the process of investing in startups. The idea behind Mattermark is that in the same way that enterprises can use big data to unearth new observations, VCs and other investors are able to do the same thing to discover how startups are truly performing in the market. 

In a previous article, we profiled a very interesting startup called Mattermark, which aims to bring big data analytics to the process of investing in startups. The idea behind Mattermark is that in the same way that enterprises can use big data to unearth new observations, VCs and other investors are able to do the same thing to discover how startups are truly performing in the market. 

Joining us today is Mattermark's Co-Founder and CEO Danielle Morrill.

IT Specialist: Thank you for joining us today Danielle. To start with Danielle, can you provide some brief background on yourself and your background?

Danielle: Sure, I started out in global logistics, and then moved over to the tech side as Community Manager for a startup named Pelago handling data and a cross section of social media marketing (Pelago was acquired by Groupon in 2011). I was also employee number one at Twilio where I was the Director of Marketing leading a team of 30 employees and acting as the company spokesperson. I was then the Founder and CEO of Referly a way for people who like to curate products to earn extra cash off recommendations through affiliate revenue. After seeing that Referly was not growing revenue at the pace I wanted it, my Co-Founders and I shut that down and started two months later as a way to bring Big Data to startup investors (Editor's Note: Danielle wrote a an interesting post on her decision to shutdown Referly because she feared it would become a 'Zombie Startup')

IT Specialist: The whole idea of applying data analytics to investing in startups is really one of the more creative ideas I've seen come out of Silicon Valley -what was your inspiration for starting Mattermark, and coming up with the idea of applying Big Data to Venture Capital investing?

Danielle: While writing and blogging on startups, I noticed that the posts that were generating the most interest were those talking about using analytics to evaluate the performance of startups. I along with my two Co-Founders at Referly - Kevin Morrill and Andy Sparks - have backgrounds in data collection and analysis, and when we saw the interest in the use of data analytics to look at the performance of startups, we decided to start Mattermark.

IT Specialist: What do you see as the state of the startup investing model now compared to the past? Do you see the current VC investing model as one which is fundamentally flawed in some fashion, or is Mattermark's solution meant more as a complement to how VC's have traditionally invested in startups?

Danielle: There have been a number of things changing in the startup investing market the last several years. First, we've seen an increasing number of angels and angel syndicates entering the market to invest in early stage startups. Meanwhile, VCs are beginning to focus more on later stage startups that have demonstrated real traction in the market. From Mattermark's perspective, only recently has the data advanced far enough to apply analytics to investing in startups. We now have the availability of many more data points -social media engagement, app store rankings and other factors - combined with the technical data tools which are capable of capturing and formatting all of this information.

With that said, we don't see the current VC model as inherently flawed. Rather, we look at what Mattermark is able to provide to investors as one more metric they can use to evaluate the performance of startups in which they might consider investing.

IT Specialist: Could you give us a sense of some of the specific metrics you use to quantify the growth and performance of startups?

Danielle: Sure, we use a number of data sets, over 20 in fact. Below are just a few of the ones we employ:

·  Web Traffic & Inbound Links

·  Mobile App Store Rankings

·  Social Media Following & Engagement

·  Employee Count & Open Jobs

·  Funding History & Details

·  Press & Blog Mentions

·  Geographical Data

IT Specialist: What is the ultimate final "score" you come out with for each startup - I believe I've seen it mentioned that you have something called a "Mattermark Score"? Also, how many companies are you currently tracking and how well does your software scale?

Danielle: That's correct. We use approximately 20 metrics in total, all of which are automatically updated daily - we are literally capturing millions of data points on a daily basis. We then take the 90-day moving average of each of these metrics and this results in a daily Mattermark score. We currently have over 150,000 companies in our database and there is no limit to the number of companies we can track.

IT Specialist: Is your solution more applicable to B2C or B2B startups, or is it pretty much applicable either way? In the same vein, how about international, non-US startups - is Mattermark also capturing data from startups in these locations? One thought I had was that by tracking international startups through Mattermark, investors might find opportunities to jump in at a much lower valuation - and hence with more upside - than they might if they focused on Silicon Valley alone? 

Danielle: Mattermark's solution is equally useful for both B2C as well as B2B. Subscribers can also filter the startups they want to track at a very granular level, so that they can target the exact type of information they are looking for.

We also track international startups as well as US startups. There are certainly startup ecosystems outside of the US - such as Tel Aviv, Berlin or London - that also have some very interesting companies. From an investor's perspective, however, it's not so much a question of getting into a startup at a low valuation, but rather the best strategy remains to find the highest quality startups rather than focusing on valuation.

One thing I would also point out is that many of the most visible fundraising opportunities in Silicon Valley are very difficult to get into for many investors, as they tend to be heavily oversubscribed and many times the most well known VCs will have an advantage in accessing these opportunities. Mattermark customers, however, can use our platform to source deals which are just as attractive as the "big name" opportunities, but lesser known and hence not nearly as competitive to participate in.

IT Specialist: So if I understand you correctly, Mattermark subscribers can get a heads-up in discovering quality startups that are less well known, especially if they are outside of Silicon Valley?

Danielle: Yes, exactly. Mattermark subscribers benefit from streamlined alerts on private companies that may be demonstrating real traction long before they become a hot deal that is difficult to get into. In a sense, Mattermark subscribers profit from an early warning radar system that gives them "first mover" advantage in sourcing great investing opportunities that the general VC community may not be aware of yet.

IT Specialist: What has been the response and up take from the VC community and have you started to see signups customers - I assume your primary target customers are VC's?

Danielle: The response from the startup investing community has been fantastic. We certainly have many VCs as customers, but we also have seen a great deal of interest from private equity firms, hedge funds and other financial institutions, as well as from some angel investors as well.

IT Specialist: Has Mattermark raised any capital to date and/or do you plan to do so in the future?

Danielle: We have. So far, we've raised a total of $1.5 million. Our investors include New Enterprise Associates, Andreessen Horowitz and Ignition, all of whom backed us when we started Referly, and have done follow-on rounds when we shut down Referly and pivoted to start Mattermark.

IT Specialist: For readers and investors who may want to learn more about Mattermark and your products, where can they go?

Danielle: First of all, I would encourage anyone who is interested in learning more about Mattermark to sign up for our free weekly newsletter which is right at the top of our homepage - www.mattermark.com. For those may be interested in subscribing to our full service subscription feel free to visit Mattermark Pro. Finally, if you're interested in taking our service for a test drive, we do offer a la carte research from time to time as well. The Mattermark Mobile App Report provides all of the latest growth and performance signals for 2,000+ startups with mobile apps.

IT Specialist: Thank you for joining us Danielle, and best of luck in the future with what seems a very interesting endeavor indeed.

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