Who Are the Most Promising Series A Candidates for 2015?

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Filtering startups by stage, employee count and growth signals is one of the core uses for Mattermark. Sign up for a free trial and view the full list here.

Based on our analysis, which you can read in greater detail here, these are the top 20 companies who look primed to raise a Series A soon (or already have, but didn’t announce it yet). I’ve filtered by startups who last raised between September 1, 2013 and January 31, 2014 with at least 15 employees and at least 20% employee growth in the past 6 months:

  • Estimote— developer platform for adding real-world sensors to applications (47 employees, Growth Score: 951). Full disclosure: I am an angel investor from before I even started Mattermark.
  • RISE — 1:1 person diet coaching (38 employees, Growth Score: 816)
  • Happify — games designed to achieve personal improvement goals through positive psychology (15 employees, Growth Score: 739)
  • Drizly — Alcohol delivery on demand (39 employees, Growth Score: 734)
  • ALOHA — health and wellness company providing gluten free, vegan and mineral based foods (43 employees, Growth Score: 598)
  • Attendify — tools to build mobile applications and private social networks for events (26 employees, Growth Score: 583)
  • GoldieBlox — children’s toys encouraging girls to explore STEM fields (25 employees, Growth Score: 580)
  • MeUndies — underwear (16 employees, Growth Score: 550)
  • Bugcrowd —tools to create and manage bug bounties (40 employees, Growth Score: 533)
  • Karma —take reliable wifi with you anywhere, made to support up to 8 devices (17 employees, Growth Score: 494)
  • Pipeliner CRM — customer relationship management software (46 employees, Growth Score: 431)
  • BucketFeet — artist designed footwear (37 employees, Growth Score: 421)
  • Ministry of Supply — high technology professional attire for men (21 employees, Growth Score: 420)
  • ViralGains — platform for viral videos (34 employees, Growth Score: 398)
  • Swivl — robotic accessory for remote collaboration via mobile video (27 employees, Growth Score: 384)
  • Certify — online travel and expense management tools (74 employees, Growth Score: 351)
  • RootsRated — outdoor experiences recommended by local experts (16 employees, Growth Score: 317)
  • TheReadingRoom —book-centric social discovery platform (16 employees, Growth Score: 294)
  • Badger Maps — mobile sales route mapping and management (15 employees, Growth Score: 273)
  • CheckIO — social game for software developers (16 employees, Growth Score: 261)

This list is constantly changing as companies growth, and all you need is a Mattermark account to start proactively sourcing the most promising startup investment opportunities today!

Login in or Sign up for a free trial and view the full list here.

For Seed Stage Startups, It‘s Hire or Die – Visualizing the Series A Pipeline For 2015

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In 2014 there were 733 Series A rounds raised by U.S. seed stage startups (excluding biotechnology, pharmaceuticals, cleantech and energy startups for this analysis).

The median Series A round size was $5M (average was $7.2M), and the median team size was 15 people at the time the round was announced, suggesting this might be the minimum viable team size for investors targeting a “run the fund” outcome (or at least 3x return).

Bearing this benchmark in mind, I segmented the set of known Series A candidates and this post walks through the thought process I’d imagine and outbound deal sourcing associate at a venture firm might use to focus in on the most promising prospective deals.

To see the 20 fastest growing picks for Series A, scroll to the bottom.


Predicting Series A Rounds for 2015

Assuming a similar number of Series A deals will happen in 2015, and that the majority of these companies will have already received seed funding sometime in the past few years, I can use Mattermark’s data to generate a list of “look alike” candidates for that next round of venture backing.

First, let’s figure out the initial pool of opportunity we are drawing from.17,120 seed stage companies in Mattermark have some funding, but only 38% of them raised that money in the past 3 years.

6,537 Seed Stage Startups Raised in the Past 3 Years

You’ll see there are companies below the X-axis; and for this first graph those are companies with a Mattermak Growth Score of less than 10. The assumption is that with such a large number of companies, investors will have at least a minimal requirement for growth signals from these companies.

Only 4,298 (66%) made this first cut, with a current growth score > 10.

Next, I wanted to start working toward a list of companies in the 700–800 range since that is roughly how many Series A rounds were raised by comparable companies in 2014. Rather than jump straight to the 15 employees cutoff, I thought it might make sense to take a look at the companies who had a team of at least 10. With fundraising taking 3–6 months, it would be reasonable to think the team might be smaller than 15 when the founders first began looking to raise a round.

2,045 Seed Stage Startups Who Raised in the Past 3 Years Currently Have a Team of 10 or More People

As you can see, many more companies fell below the X-axis with this filter, which also raised the bar on growth by requiring a score of at least 50. Of the teams currently meeting the 10 employees or more milestone, only 60% of them also enjoy a Mattermark growth score of 50 or higher.

Only 1,220 (19% of the original 6,537) made the second cut, with a team of at least 10 people and a Mattermark growth score > 50.

Finally, for the third cut I required that companies have at least 15 employees and a Mattermark growth score of at least 50.

1,300 Seed Stage Startups Who Raised in the Past 3 Years Have a Team of 15 People or More

Of these companies, only 58% of them also meant the growth requirement and so we are left with 750 companies with a Mattermark growth score of at least 50, and a team of at least 15 people.

As you might expect, these are concentrated around companies who last raised in the past 12–18 months but we also see some interesting outliers who have survived through profitability or possibly unannounced rounds.

Only 750 (11.5% of the original 6,537) made the final cut, with a team of at least 15 people and Mattermark growth score of at least 50.

To me, this is a visualization of the struggle I personally faced in 2014 as I failed to raise a Series A in Q1 and then successfully closed our round in Q4. For founders pondering what they need to do to be a strong candidate for Series A, I think it is important to think of team size as a signal.

If things are going well, a growing team indicates the founders are confident enough about the future to spend money on recruiting and headcount, and that they have a compelling enough vision, product, and leadership to gather a team around you. Of course, sometimes startups hire way ahead of traction — but as Paul Graham says in “The 18 Mistakes That Kill Startups”

Starting a startup is too hard for one person. Even if you could do all the work yourself, you need colleagues to brainstorm with, to talk you out of stupid decisions, and to cheer you up when things go wrong.

The last one might be the most important. The low points in a startup are so low that few could bear them alone. When you have multiple founders, esprit de corps binds them together in a way that seems to violate conservation laws. Each thinks “I can’t let my friends down.” This is one of the most powerful forces in human nature, and it’s missing when there’s just one founder.

While this data does not prove the point of Graham’s wisdom, it does support the suggestion that there could be some connection (correlation, not necessarily causation) between growing to a healthy team size and surviving the the next funding round.


So, Who Are the Most Promising Series A Candidates for 2015?

Filtering startups by stage, employee count and growth signals is one of the core uses for Mattermark. Sign up for a free trial and view the full list here.

Here are the top 20 companies who look primed to raise a Series A soon (or already have, but didn’t announce it yet). I’ve filtered by startups who last raised between September 1, 2013 and January 31, 2014 with at least 15 employees and at least 20% employee growth in the past 6 months:

Estimote— developer platform for adding real-world sensors to applications (47 employees, Growth Score: 951). Full disclosure: I am an angel investor.

RISE — 1:1 person diet coaching (38 employees, Growth Score: 816)

Happify — games designed to achieve personal improvement goals through positive psychology (15 employees, Growth Score: 739)

Drizly — Alcohol delivery on demand (39 employees, Growth Score: 734)

ALOHA — health and wellness company providing gluten free, vegan and mineral based foods (43 employees, Growth Score: 598)

Attendify — tools to build mobile applications and private social networks for events (26 employees, Growth Score: 583)

GoldieBlox — children’s toys encouraging girls to explore STEM fields (25 employees, Growth Score: 580)

MeUndies — underwear (16 employees, Growth Score: 550)

Bugcrowd —tools to create and manage bug bounties (40 employees, Growth Score: 533)

Karma —take reliable wifi with you anywhere, made to support up to 8 devices (17 employees, Growth Score: 494)

Pipeliner CRM — customer relationship management software (46 employees, Growth Score: 431)

BucketFeet — artist designed footwear (37 employees, Growth Score: 421)

Ministry of Supply — high technology professional attire for men (21 employees, Growth Score: 420)

ViralGains — platform for viral videos (34 employees, Growth Score: 398)

Swivl — robotic accessory for remote collaboration via mobile video (27 employees, Growth Score: 384)

Certify — online travel and expense management tools (74 employees, Growth Score: 351)

RootsRated — outdoor experiences recommended by local experts (16 employees, Growth Score: 317)

TheReadingRoom —book-centric social discovery platform (16 employees, Growth Score: 294)

Badger Maps — mobile sales route mapping and management (15 employees, Growth Score: 273)

CheckIO — social game for software developers (16 employees, Growth Score: 261)


This list is constantly changing as companies growth, and all you need is a Mattermark account to start proactively sourcing the most promising startup investment opportunities today!

Login in or Sign up for a free trial and view the full list here.

Why Is the Number of Seed Rounds Raised in 2014 Down 30%? Exploring the Connection Between Startup Funding Activity and U.S. Interest Rates

Published on in Venture Capital by

All analyses in this report are for U.S. seed investments as reported in Mattermark — The Deal Intelligence Company, and exclude companies in the following categories: biotechnology, pharmaceuticals, cleantech, and energy.

While late stage deals and private equity investment in pre-IPO startups in 2014 lead to the largest amount of capital committed to startups in the past 10 years, overall deal volume in Q4 has dropped to 2011 levels, lead by a plunge in the number of seed rounds:

While some investors told me they felt volume and valuations were at an all time high, other highly credible sources confirmed the data echoed a trend they were also seeing with a high volume of seed transactions.

Number of Deals vs. Seed Capital Invested

Without the quarterly breakout it is difficult to discern the downward trend in 2014. On the whole, seed investment dollars in 2014 looked very similar to 2013 but the number of deals dropped 30%.

This drop in number of deals, without a similar decline in investment dollars, indicates that the average seed round in 2014 was larger —in turn suggesting the valuation or valuation cap of the average round increased. And indeed, the average seed round rose 28% while the median rose 40%.


Exploring Relationships Between Seed Deal Volume, Capital Deployment & Key Economic Indicators

Startups continue to receive what Fred Wilson called “eye popping EBITDA multiples” in his March 2014 post “The Bubble Question”. Fred goes on to explain the connection between artificially low interest rates resulting from the U.S. central bank’s reaction to the 2008 financial crisis, and the picture he paints is a story of investors’ struggle to find decent returns in a low interest rate environment where money is cheap and undifferentiated.

Since the financial crisis of 2008, policy makers in the developed world have kept interest rates at or near zero. They have flooded the market with cheap money in an attempt to heal the wounds (losses) of the financial crisis and incent business owners to invest and grow their businesses. That has not worked particularly well but it has worked a bit. Though their words have changed in recent years, their actions have not changed very much. We still are in a policy framework where money is cheap and interest rates are near zero.

If you go back and apply the formula [yield = earnings/purchase price] and use zero for yield/interest rate, then one would pay an infinite amount for an earning stream. Of course that doesn’t make sense and it has not happened. But valuations are at extreme levels because you cannot get a decent return on your money doing anything else.

At some point this will change. The yield on the 30 year treasury yield has been sub 5% since the financial crisis. If (when?) it gets back to the 6–8% range where it was for most of the 1990s, we will be in a different place

With this guideline in mind, we can get some understanding of the key drivers for startup investment volume on the whole — which from a dollars perspective is at an all-time high. I’ve focused on the changes in the seed funding landscape because these are things that will impact the ecosystem 2 to 5 years from now as these companies progress into later rounds of funding and exits. This is the pipeline for VC dealflow.

To gain a more firsthand understanding these two factors’ impact on seed funding and the VC pipeline, we’ll take a look at the 30 year treasury yield and a few other economic indicators. We examined association between seed investment activity and a few economic metrics. Our analyses found these indicators to be strongly correlated with seed investment activity:

  • The NASDAQ Composite Index
  • The 10 Year Treasury Interest Rate
  • The 30 Year Treasury Yield
  • The U.S. Monetary Base

The NASDAQ Composite Index

There is a strong positive correlation between seed investment dollars and the NASDAQ Composite Index (r=0.88, p0.001)

Source: Nasdaq Composite Index — Yahoo Finance.

10 Year Treasury Rate & 30 Year Treasury Yield

There is a strong negative correlation between the 10 year treasury rate and seed investment dollars (r=-0.67, p=0.001), and a strong negative correlation between Treasury Yield 30 Years (^TYX) and seed investment dollars(r=-0.65, p≤0.001)

Board of Governors of the Federal Reserve System (US), 10-Year Treasury Constant Maturity Rate [DGS10], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/DGS10/ January 15, 2015.

There is an even stronger negative correlation between 10 year treasury rate and the volume of seed rounds (r=-0.75, p≤0.001), as well as a strong negative correlation between treasury yield 30 years (^TYX) and the volume of seed rounds (r=-0.68, p≤0.001)

Board of Governors of the Federal Reserve System (US), 30-Year Treasury Constant Maturity Rate [DGS30], retrieved from FRED, Federal Reserve Bank of St. Louishttps://research.stlouisfed.org/fred2/series/DGS30/ January 15, 2015.

What Does It Mean?

This is the place where I pause and remind you that correlation, no matter how strong, does not make a case for causation on it’s own. Instead, we use domain knowledge and the opinions of experts like Fred Wilson to explore the causal connection between interest rates and the availability of capital to start new ventures. Predicting the future is not the goal here, it turns out describing and understanding the world as it is, is quite challenging enough.

The large drop in Q4 is interesting for several reasons. First, there is a seasonal effect to startup funding and you can see from the final graph that Q4 tends to see a decline or at least plateau in financings each year. However, the steep decline might also be investors (over?)reacting to mounting concerns about valuations and economic correction related to tapering of central bank activities.

And of course there is another possibly — maybe hundreds of startups collectively decided to stop announcing their funding rounds? If you raised a round in Q4 2014 and would like us to add it to our analysis simply tweet to@Mattermark or email data@mattermark.com

What To Expect in Q1 2015?

It’s a bit early to tell how this quarter will shape up, but you can count on the team at Mattermark to keep you updated as we continue to track this fascinating relationship between seed funding events and economics indicators. A couple things to think over:

  • Are seed financing by high net worth individuals a leading or lagging indicator of the economy’s health on main street?
  • Are institutional seed rounds really just a Series A with a different name?
  • What does this mean for the volume of venture rounds further down the pipeline, and the dearth of new funds coming on the market?

Acknowledgements & Notes

Thank you to Sarah Catanzaro, Joshua Luxton, and Alex Wilhelm for reviewing drafts and providing feedback on this post.

To pre-order our research report on U.S. startup investment over the past 10 years please visit our website and place your order for Feb. 2, 2015 delivery.

Methodology Note: All analyses in this report are for U.S. seed investments only and excludes companies in the following categories: biotechnology, pharmaceuticals, cleantech, and energy.

Sources: This article was compiled with information collected from Mattermark, AngelList, Crunchbase, FRED — Federal Reserve Bank of St. Louis, and NASDAQ.

To learn more and access the raw data used to generate this post, sign up for your free trial of Mattermark professional today.