50 Unknown, but Promising Startups

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There are a few early clues that a startup will be successful, according to market researcher Quid: Have the company’s founders worked together before? Is the business in a hot sector, one where many other new startups are also focusing? Has it raised funding at a quick pace? Based on those criteria and others, Quid looked at more than 50,000 companies and chose 50 it deemed the most promising.

While venture capitalists often try to assess startups’ potential one by one—at the moment they hear a pitch—some market researchers such as Quid are trying to crunch data on tens of thousands of startups to come up with their own set of best bets. This isn’t Quid’s first attempt to do this: In 2009, Businessweek asked Quid, then named YouNoodle, to pull together a list of 50 promising startups that were flying under the radar. Almost eight years later, it turns out that the list had its share of flops—companies that shut down or lost value—but some notable home runs as well. Cloudera, Palantir, Evernote, Twitch and Spotify all increased at least 30 times in value since 2009. If YouNoodle’s list had been a venture portfolio, it would have been one of the best-performing funds of the last two decades. So we asked Quid’s chief executive officer, Bob Goodson, to make a new list.

The companies, all founded in the past six years, have been raising money at an impressive clip—typically once every nine months, suggesting heavy interest among investors. The average business had already raised three rounds.

271

Average days between rounds

3.42

Average number of rounds

Investors had a particular interest in certain emerging sectors. Online security, fraud detection and artificial intelligence startups raised more than others on Quid’s list.

Top Sectors by Capital Raised

Online Security & Fraud Detection

$273.6M

Artificial Intelligence

$145.8M

Autonomous Driving; Image Recognition & Mapping Technologies

$134.5M

Augmented Reality

$110.8M

Smart Sensors

$97.9M

Drones

$84.7M

Digitization of Education

$83.4M

Which investors will benefit if these businesses do in fact expand to become the next Spotify or Palantir? These are the venture firms that have taken stakes in the most number of companies on the list of 50:

VC firms investing in multiple startups on the list

6

startups

  • Andreessen Horowitz
  • Sequoia Capital

 4

startups

  • Felicis Ventures
  • First Round Capital
  • Y Combinator
  • TechStars

 3

startups

  • Kleiner Perkins
  • Founder Collective
  • TriplePoint
  • Shasta Ventures
  • Promus Ventures

Here’s the full, sortable list of the 50 most promising startups from around the world, based on Quid’s research.

Company Name

Headquarters

Market Sector

Capital Raised Over time

Average Number of Days Between Rounds

Accion Systems

Boston

Space Technology

Satellite propulsion

$9.5M

492

 

Airware

San Francisco

Drones

Commercial drones

*$75.3M

204

 

Astro

New York

Smart Home

Speaker light bulbs

$5.5M

257

 

AYR

New York

Fashion

Bonobo spin off for women

$6.2M

98

 

BlueLine Grid

New York

Online Security & Fraud Detection

Securing mobile usage for govt

$6.0M

251

 

Clark Germany

Berlin

FinTech

Digital insurance

$15.9M

136

 

Cognotion

New York

Digitization of Education

$4.4M

127

 

Deako

Seattle

Smart Home

Smart lighting

$4.7M

134

 

Deep Space Industries

Moffett Field, Calif.

Space Technology

Space mining

$5.5M

146

 

Dispelix Oy

Espoo, Finland

Augmented Reality

AR optics

$1.9M

 

Distil

Arlington, Va.

Online Security & Fraud Detection

Cloud security

$55.8M

270

 

Doppler Labs

San Francisco

Smart Sensors

Smart earbuds

*$58.0M

202

 

Eccrine Systems

Cincinnati

Smart Sensors

Sweat analysis - DoD applications

$8.9M

476

 

Edyn (Soil IQ)

Oakland, Calif.

Smart Home

Smart garden

$3.8M

228

 

EyeVerify

Kansas City, Mo.

Smart Sensors

Eye authentication (Wells Fargo and Sprint)

$6.0M

312

 

Focus FS

London

FinTech

Digital banking

$17.6M

180

 

Folloze

Palo Alto, Calif.

Artificial Intelligence

Sales and marketing integration

$16.2M

307

 

dribble-startup.gif

Geoblink

Madrid

Artificial Intelligence

Geospatial business intelligence

$1.5M

160

 

GrayMeta

Agoura Hills, Calif.

Artificial Intelligence

Enterprise search

$8.9M

244

 

Instamotor

San Francisco

Mobile Retail

Second hand car sales

$9.5M

298

 

Kahuna

Palo Alto, Calif.

Artificial Intelligence

A.I. in multi-platform marketing

$58.3M

382

 

LEIA

Menlo Park, Calif.

Smart Sensors

Holograms from smartphones

$25.0M

N/A

 

Mad Street Den

San Francisco and Chennai, India

Artificial Intelligence

AI for fashion

*$1.5M

579

 

Mapillary

Malmö, Sweden

Image Recognition & Mapping Technologies

Crowdsouring street-level view maps

$9.5M

430

 

Mast Mobile

New York

Telecomms

Connects mobile phones to corporate network

$7.0M

196

 

Meta Company

Redwood City, Calif.

Augmented Reality

Augmented reality platform

$99.0M

336

 

Mihup Communications

Kolkata, India

Artificial Intelligence

AI digital assistant

$6.7M

N/A

 

Mobvoi

Shanghai, China

Artificial Intelligence

Chinese voice recognition/AI

$31.6M

341

 

Naritiv

Los Angeles

Mobile Retail

Snapchat marketing

$7.1M

654

 

Navisens

San Francisco

Augmented Reality

Location awareness without GPS or Wifi (for AR)

$2.7M

385

 

NewStore

Boston

Mobile Retail

Mobile retail platform / fashion

*$51.5M

111

 

Notion (Loop Labs)

Denver

Smart Home

Smart home sensor

$8.9M

97

 

OB1 Company

Fairfax, Va.

FinTech

Bitcoin marketplaces

$3.3M

424

 

Omada Health

San Francisco

Digital Health

Chronic disease prevention programs

$77.0M

324

 

Omapal Technologies

Mumbai, India

Fashion

Fashion rental platform

$6.9M

56

 

Paracosm

Gainesville, Fla.

Augmented Reality

3D in construction

$7.2M

253

 

PreNav

San Carlos, Calif.

Drones

Drones for infrascructure inspection

$5.5M

144

 

Quanergy Systems

Sunnyvale, Calif.

Autonomous Driving; Image Recognition & Mapping Technologies

Autonomous driving

$134.5M

167

 

Remind

San Francisco

Digitization of Education

$59.5M

316

 

Rulai

Sunnyvale, Calif.

Artificial Intelligence

AI bots, Valley and China

$6.9M

145

 

SafeBreach

Tel Aviv, Israel

Online Security & Fraud Detection

Predictive analytics for cybersecurity

$19.0M

134

 

Shape Security

Mountain View, Calif.

Online Security & Fraud Detection

Cyber security

$91.0M

458

 

Signifyd

San Jose, Calif.

Online Security & Fraud Detection

E-commerce fraud

$50.4M

457

 

SlantRange

San Diego

Drones

Drones for agriculture

$9.4M

262

 

Soar

Mountain View, Calif.

Digitization of Education

Educational game Blue Apprentice

$6.5M

221

 

Socratic

New York

Digitization of Education

$7.5M

588

 

Treasure Data

Mountain View, Calif.

Cloud

Cloud data management

$56.4M

249

 

Troops

New York

Artificial Intelligence

Slackbot for sales teams

$9.6M

127

 

Wickr

San Francisco

Online Security & Fraud Detection

Mobile encryption

$51.4M

299

 

Zodiac

Philadelphia

Artificial Intelligence

Predictive analytics on customer lifecycle

$4.5M

91

 

Methodology

Quid began with a list of around 50,000 private companies that had received venture capital or venture debt in the past three years. The data on investment received, investors, location and founding year came from S&P Capital IQ and are current as of September 2016. Quid narrowed the list down to around 5,000 companies by keeping those that fell into one of three categories: 1) early-stage startups with low valuations that raised money quickly from a set of top venture capital firms; 2) higher-valuation companies that already showed traction in their industry; and 3) companies that were in a sector that Quid determined was an expanding market opportunity. Quid found these market opportunity areas by analyzing the company descriptions of startups and finding what sectors were most popular among companies founded in 2015 and 2016, plus which sectors raised the most money from the top five venture capital firms. (The list of top venture capital firms comes from a top fund-of-funds that declined to be named for compliance reasons.)

Quid narrowed the list from 5,000 to 200 by ranking the companies according to a series of metrics: time between funding rounds, number of rounds, quality of investors and amount raised. The list was then narrowed to 50 by looking at such other metrics as whether the founders had worked together before (considered a plus), where the founding team had gone to school and how many employees the company had. Quid’s Goodson also made subjective decisions about which companies seemed most promising, just as he did with the 2009 list. Goodson also excluded companies that had had extensive press coverage already. Quid declined to disclose numeric scores or exact formulas that it used to rank companies in the final stages.

The final list was shaped by some preset parameters: Biotech was excluded, and 10 of the companies were from outside the U.S. Note: One company, EyeVerify, was acquired in September, around the time the list was being made. Otherwise, all companies are independent.

 

Original article: www.Bloomberg.com

Written by: Ellen Huet

Case StudiesShana Grossman