Dealmakers are always striving to land more deals, achieve higher IRR, and outpace the competition. The key to unlocking all those milestones? Solid deal sourcing.
Identifying the right investment opportunities at the beginning of the dealmaking process saves time, effort, and headaches later on. Focusing all your attention on ideal targets allows you to build deeper relationships and win more often.
But the question is: How do you find information on private companies? With databases and Big Data, private company data software, and deal sourcing platforms, your firm can supercharge and streamline your deal flow process to fly past your competition.
Before we can dive into specific tools, it's important to understand the differences between databases and big data. Databases have existed for decades and are the foundation of modern technology. They're how we collect and store information in formats and structures that are easy for a computer to read.
Traditional databases handle only structured data, or information that is clearly defined, easy to organize, and inflexible. At a basic level, these databases are akin to spreadsheets where data is stored in columns and rows, though there is much more depth to data management than we can cover here.
However, over the last several decades, unstructured data — information that comes from formats including emails, images, and social media — has grown exponentially and offers dealmakers a wealth of valuable information. The term “big data” was coined to refer to all data — structured, unstructured, and everything in between — and today databases exist that enable firms to manage and make use of this big data.
Now that you understand the technology behind the tools, it's time to learn how to find information on private companies. Public company information is usually easy to come by since financial information, employee numbers, and even policies and product development (to an extent) all have to be made available for investors.
Information on private companies, however, is not in one handy place, such as an investor portal. It's scattered and messy, which means dealmakers and data analysts have to search all over to find bits of this information. Then, they have to undertake the time-consuming process of validating and piecing together all the myriad points of data to make sense of it.
The key is to use the right tools so your firm can reap the benefits of having all the available private company data without having to suffer through this inefficient, error-prone manual process.
The first stop for many dealmakers is general company information databases, such as Crunchbase or ZoomInfo. These repositories will usually have data on both public and private companies, they're generally easy to search, and the number of companies on which they have data is vast.
However, the reliability of their data varies wildly, as they usually rely on automated data scrapers from public sources, such as press releases, and often do not have humans check for accuracy. Some even source information from voluntary community submissions. So, while they are a good start for general queries, and you may find some hidden nuggets, it's important to vet and cross-reference each data point you use from these tools.
The "Fastest-Growing" or "Top Company" lists from the likes of Forbes and Deloitte can also provide some helpful information for dealmakers. While you won't find a "diamond in the rough," and there is little proprietary private company information in these lists, they are a great resource for discovering up-and-coming players. These lists are also helpful for analyzing trends for what's topping the market.
Keep in mind: The companies on these lists are in the spotlight, which means you will have to compete with other firms for their attention, so prepare accordingly. If you choose to pursue one of these opportunities, use other private company information databases and software within our list to bolster your chances of success.
Pro Tip: If you want a leg up on your competition, Sourcescrub's Best of Bootstrapped lists are a bit different than the others we listed here. Broken down by industry and year founded, these lists showcase the hidden gems usually only found within deal sourcing platforms (another source of private company data that we'll discuss in a bit).
Private company information databases such as S&P Global or ORBIS are very similar to the first tool we discussed, but they focus on collecting and collating data specifically on private companies. There are far more private companies than there are public ones, so these databases usually contain millions of data points from a multitude of sources.
However, full company profiles are difficult to come by, and information quickly becomes outdated, especially since private companies evolve so rapidly. When you're using these databases, take each data point with a grain of salt and remember to vet and cross-reference the information you get. Don't be afraid to use each database for its particular strength, either. Many will excel in one specific vertical, data point, or even feature rather than function as a one-size-fits-all source for private company data.
The most sophisticated of the tools in our list, deal sourcing platforms such as Sourcescrub, offer many more features than you'll find in private company information databases. The best deal sourcing platforms will take all the private company data available from across sources and weave it together to create robust company profiles and a connected web of insights, rather than individual data points.
While they are often AI-powered to increase efficiency and productivity, the best deal sourcing platforms will include humans in the loop to improve data quality and inject context so dealmakers can more easily use the information provided. In this way, they enable dealmakers to more efficiently research private companies by offering data signals such as company health trends and growth trajectories. Some even estimate more difficult-to-find information, such as private company revenue data.
On top of all this, deal sourcing platforms will sometimes have monitoring and notification capabilities where they can automatically alert dealmakers of new companies or changes within their firms’ targeted industries, streamlining the entire deal sourcing process.
To find their next deal, firms and dealmakers will often use several of the tools on our list in tandem, depending on their specific focus and goal. However, the process for finding private company data generally follows the same steps:
A successful deal starts with a successful search. By using the tools on this list and following our steps about how to find information on private companies, you can source more of the right investment opportunities for your firm.
Get started today with a deal sourcing platform like Sourcescrub, which has all the features modern dealmakers need: Hundreds of thousands of sources, millions of data points, and the crucial context to help you make the most of what you find. Let’s talk!
