While the internet is flush with verified data about public companies, information about private companies is notoriously tough to navigate. It's scarce, messy, and scattered across thousands and thousands of sources like websites, trade show lists, and industry roundups. And since private companies represent the vast majority of investment opportunities, dealmakers go to extraordinary lengths to find it.
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In spite of these efforts, just 27% of firms are confident they've never overlooked or lost a deal to a competitor due to a lack of data. As dealmakers continue to narrow their focus on niche markets and grow increasingly specialized, relying on disconnected information that fails to capture the richness and value of connected sources, and attempting to manually piece it together, will put them at more and more of a disadvantage.
Collecting, cleaning, validating, and organizing private company data from all the sources where it exists is a monumental task that prevents most dealmakers from taking full advantage of it. Although this information is publicly available, it's disconnected from its origins.
Sources-first, connected data is created by weaving together information from every available source, and maintaining the link from companies and profiles back to the sources where information on that company is found. By linking company profiles to sources, firms get the broadest possible view of the market along with a deep understanding of private companies' digital footprints and journeys. This allows them to quickly zero in, get up to speed, and keep tabs on target companies, their competitors, and their categories.
The result is a web of insight that not only delivers verified, high quality company details, but also offers the context necessary to better understand markets and derive deeper, less obvious data signals about these companies' growth intent and direction.
Sources-first data has the power to transform the traditional end-to-end dealmaking process, from industry research to target monitoring. Let's dig into the top three benefits of sources-first data — quality, context, and intent — and how they impact a few of these specific use cases.
A recent survey found that only 8% of firms rate the freshness of their data as "Excellent," while less than 6% believe the accuracy and completeness of their data meet this standard. This lack of quality is the result of disconnected, single-source data, and it not only leads dealmakers to waste time on the wrong targets, but it also prevents them from identifying more of the right ones.
Because sources-first data takes advantage of information wherever it's found, it leads to company profiles that are deep, detailed, and objective. This allows dealmakers to confidently assess companies based on a broader set of criteria and pinpoint potential opportunities at a more granular level, while quickly eliminating those that don't align with their criteria.
Data quality is especially critical for firms that focus on niche markets and have highly selective thesis criteria. Making the switch from single source to sources-first data enabled Mike Cavallaro and his team at Morgan Partners to increase relevant prospect identification by 80%.
"There are so many data points that the firm looks at when vetting companies to determine whether they are a mutual fit," Mike says. "We now have access to more companies plus the ability to pinpoint and prioritize the ones that best match our guidelines, so that we can establish relationships with more prime candidates."
Developing a detailed understanding of even just one private company requires dealmakers to scour the internet and manually piece scattered data together. This tedious, error-prone process is not only extremely inefficient, but also makes it easy to overlook or misunderstand what could be a top target — especially when dealing with bootstrapped companies.
When categorized and linked correctly, sources provide more than just a record of individual private companies — they become an interconnected web of insight. The ability to "zoom out" and view all of the sources attached to a company profile gives dealmakers the context necessary to rapidly identify similar companies, generate competitive intelligence, and better understand entire categories.
For example, imagine knowing a top target that meets all your investment criteria is attending three upcoming trade shows, and then being able to instantly recognize five other companies each planning to attend these same three shows. It's safe to assume these five new companies have a profile similar to your original target, and that your firm should plan to attend this conference and meet with all of them.
Context is also critical for market mapping. Nobody knows this better than seasoned Corporate Development executive, Charles Shannon, who was tasked with creating an entire M&A strategy in just 6 weeks. "I knew there was no way I could build out a thorough market map at the level of granularity that I needed to guide an entire M&A strategy doing manual research," he recalls. Using sources-first data enabled Charles to rapidly evaluate over 6,000 businesses and narrow this list down to 600 companies by his deadline. "Once I have an initial list of companies, I can then search for others with similar profiles, which leads to another list, and so on and so forth," he explains of his context-driven process.
Insight into a company’s growth trajectory and transaction readiness is essential for dealmakers to determine whether a business is worth their time and investment. Sources-first data provides dealmakers with the ability to see beyond the obvious. For example, while private companies don’t publicly release revenue data, the ability to connect the dots across information like open job postings, an uptick in conference attendance, and increased headcount makes it possible to infer revenue growth.
Tracking and tuning into data signals like these allows dealmakers to identify promising private investment targets much faster and earlier than the competition. Receiving near real-time alerts and crafting personalized outreach around signals like key executive hires or competitor acquisitions shows you’re paying close attention, highlights your industry knowledge and expertise, and also separates you from the competition.
“Financial data just isn’t publicly available for private companies, but data signals allow you to create a proxy and do some back-of-the-napkin math that helps you figure it out,” says Jordan Margolin, who leads Business Development for VSS. “Whether you’re having active conversations with an opportunity or looking for reasons to reach out to someone so that your firm is top-of-mind once they’re ready to talk, this gives you the data you need to go into these conversations more knowledgeable about your specific targets and these niche industries as a whole.”
Dealmakers who want to be first in line to win deals have to be on the cutting edge of data and technology. Using single-source data, i.e. websites, to help identify and engage deals used to be enough to enable firms to rise above intermediary-only focused competitors.
But today's top firms depend on sources-first data to enhance efficiencies, deepen their domain expertise, confidently pursue private companies, and much more. Learn more about sources-first data and how it enables firms to understand private company intent. Read our data signals guide.
