As lawmakers home in on tech giants' data policies, Crunchbase said it has found a lucrative loophole with company data. And it just raised $30 million to prove it.
- Crunchbase, a former Verizon/AOL company that collects, tracks, and shares data on private companies, announced on Thursday it raised $30 million in Series C funding.
- As the conversation around data trends towards regulation and privacy, Crunchbase CEO Jager McConnell is focused on a less sensitive realm, trafficking in data about businesses instead of individual users.
- Corporate data, a closely guarded resource in Silicon Valley's startup world, can actually help improve representation across founders, investors, and employees, McConnell said.
- McConnell told Business Insider that he plans to turn the database company into the LinkedIn for private companies, replacing the need for separate corporate websites and jobs pages.
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Data has become a dirty word. Although groundbreaking technologies like machine learning and predictive analytics rely on vast troves of the stuff, the lax treatment of people's data by tech giants like Google and Facebook has made data a hot-button issue. As far as many in the public are concerned, Silicon Valley can't and shouldn't be trusted with data.
That hasn't stopped Crunchbase from going all in on data. The startup was spun out of Verizon/AOL in 2015 after a less than successful acquisition, and has since built one of the largest publicly accessible repositories of data about private companies. And on Wednesday, it raised $30 million in Series C funding to prove that its up to the challenge.
"A lot of companies in this space have contact data, and that's a dangerous game," Crunchbase CEO Jager McConnell told Business Insider. "These privacy laws are going to nip you in the butt there. There are no privacy laws around company information."
McConnell is right. Many of the proposed privacy laws deal strictly with consumer data and use landmark legislation like GDPR as a guidepost. Both California and Nevada have introduced laws designed to give consumers more control over their personal data, with many other states publicly waiting to see how the new laws shake out before enacting their own.
Companies, on the other hand, don't have the same protections, which allows companies like Crunchbase and its premium-priced competitor Pitchbook to exist. Crunchbase partners with more than 4,000 data suppliers that provide it with valuable information on startup companies, such as annual revenue or burn rate, McConnell told Business Insider. These are highly sought after stats for investors and potential employees alike and are highly guarded by company insiders, McConnell said, which is why his main competitor charges a hefty fee for access to that information.
"We are the democratized version of that," McConnell said.
That's a good thing, he argues, because it levels the playing field and allows underrepresented groups to see the same data and insights usually passed around in closed-door boardrooms full of Stanford alumni.
About 70% of "seed" funding data is represented on Crunchbase because the site is "the only place on the internet" that will take it, McConnel said. That kind of exposure and validation is inherently valuable, especially to founders that may struggle with the popular Silicon Valley warm introduction.
"We can surface who will invest in your company or which company is a fit for a job seeker with an unusual background," McConnell said.
Eventually McConnell hopes Crunchbase will replace company websites the same way LinkedIn killed personal resume sites. In fact, Crunchbase already powers company profiles on LinkedIn itself, so it's not a far cry away from becoming the database of record for private companies in Silicon Valley and beyond.
"It's a standardized way for companies to search and connect with one another, and as that becomes more and more obvious, their website matters less," McConnell said. "They might keep it up as a brand page, the site isn't going to go away, but those partnership and careers pages will be on Crunchbase."