How To Use Crunchbase for Investors and Startup Owners
There are a lot of crowdsourcing websites out there with a rich database filled with companies (public or private) all around the world. But for me, none could be more distinguished than Crunchbase — especially for investors interested in investing in startups and for startup owners looking for investors.
Crunchbase, Inc. was launched in 2007 with the main purpose of tracking startup companies. Today, it has a vast online database of company information around the globe. It’s a useful platform for investors and business owners to network for free. Whether it’s a private or public company, you’ll see their company details, financials, founding team members, products, services, and latest news.
People use Crunchbase for 4 main purposes as shown above. But I want to focus on how Crunchbase can be a tool to find investments and to find investors. This post is to help both small-time investors and startup businesses on how they might use Crunchbase to their advantage.
But first — let’s talk about Crunchbase (CB) ratings.
What are Crunchbase Ratings and How Do They Work?
There are two CB ratings to look into — the rank and the trend score.
According to a blog post by Crunchbase’s marketing team:
“Crunchbase Rank is a dynamic ranking for all entities (i.e., Companies, Organizations, and Schools) in the Crunchbase dataset. It measures the prominence of an entity.”
- Denise Stephan from CB Marketing Team, 2019
Meanwhile,
“Crunchbase Trend Score tracks the fluctuations in Rank. As a company’s rank changes, so does its Trend Score. Trend Score measures the rate of a company’s activity on a 20-point scale. Scores closer to +10 mean it’s moving up in rank much faster compared to their peers. Scores closer to -10 mean it’s moving down.”
- Denise Stephan from CB Marketing Team, 2019
In other words, the higher the rank of the company has, the greater its influence. And the higher its trend score, the faster is its company growth in terms of influence.
To find investments or to find investors, I use both the rank and the trend score to filter the results out to make my search easier. Ideally, we want to see a startup company with a higher rank compared to its peers within the same industry. We also want a startup company that’s fast-growing — thus a higher trend score.
For Investors: How to Use Crunchbase to Find Investments
With the use of CB’s advanced search (query builder), you can use the ratings to filter out the startup companies that are worth the investment. Here’s an example.
Here, I’m finding for a startup company that has to do with green technologies, clean or renewable energy, and waste management within the U.S. I set the trend score to at least 2. This already filters out the companies that are building their network fast compared to their peers. Lastly, I set the total funding amount to at least $50,000 to filter out the companies that still need more funding.
According to the search results, my top 3 viable options are CALSTART, EnSiteUSA, and PlasmaE. Plus a few more on the list. Now, I can view the database for each company by clicking on their respective links. Before investing, I have to do my due diligence by getting to know more about the company’s core team, financials, news, and events. I can begin my investor’s research now by clicking on their company profiles.
For Startup Owners: How to Use Crunchbase to Find Investors
Now, how about if I’m a startup company owner finding investors who can help me raise my capital?
Suppose I’m looking for a reliable investor for my startup environmental consulting firm in the U.S.
Here, I set the number of investments filter to at least 100 because I want a well-established investor who has made several investments already. Next, I set the rank to less than 1,000 because I only want the results to show the top picks out of more than 170,000 investors in CB’s database. That means I’m only interested in the most influential investors belonging to the top 0.6% of their database.
Turns out my top viable options are also startup accelerators like Y Combinator, Techstars, and 500 Startups. As a side note, startup accelerators open a rigorous program for selected startup companies to provide mentorship, education, training, networking, and financing opportunities. If you’re a startup owner, you might consider joining an accelerator program for 3 to 6 months. Y Combinator, for example, has helped Airbnb to what it has achieved today.
Networking Events for Investors and Startup Owners
Once we’ve done the preliminary research of our prospect list, we eventually have to reach out to them. As Warren Buffett said, “never invest in a business you cannot understand”. Part of getting to know our investors or our investments is by meeting with them and getting in action. Crunchbase also lists events such as conferences, meetups, demo days, webinars, expos, and classes.
For example, I’m finding for an event about sustainability that I can attend from now. Based on the search result, only 1 event coming up in June 2021 is available. Its description says that Movin’On Summit 2021 | 5th Edition is a world summit on sustainable mobility. From here, I already have an idea that maybe I can find investments like electric car companies in this event. Or maybe if I’m a startup owner of an automotive parts company, I can find interested investors in this event.
If you’re interested in the event, you can get to know more details on the event’s profile page. You can even check out the event’s speakers which also have their CB rank to gauge the speaker’s influence and expertise on the subject matter. Lastly, this will lead you to the registration link when you’re decided to join the event.
Working on your business idea is a spark that gets you excited. But finding credible investors to fund your startup business is an uphill challenge of keeping the fire burning. Meanwhile, so is true also for interested investors looking for the right startup companies that can successfully manifest their vision.
When used wisely, Crunchbase can be a powerful tool to connect investors and startup owners. I’ve only shown basic examples on how to use Crunchbase’s tools and database to find investors or find investments. To maximize Crunchbase, you can also pay extra for Crunchbase Pro to make more informed decisions. Nevertheless, the free version itself is already a good starting point.
Aside from Crunchbase, there are a lot more places to find the best startup companies to invest in. Check out the post I made on the Top 4 Ways to Find the Best Startup Companies to Invest In.
What are the best features of Crunchbase you found useful in searching for investors and investments? Don’t forget to comment them down below!
