CB Insights have released a product called Mosaic which gives private companies a score which predicts their likely future success. The score is derived from lots of data they pull from structured and unstructured sources on the web and then process through a heavy statistical analysis. They pulled data from as many sources as possible looked to see which pieces of it have correlated with startup success in the past and assumed that companies scoring highly on those elements will succeed in the future.
The score has three components, momentum, market, and money. That seems reasonable, although doesn’t give as much prominence to team and product as most VCs do when they talk about startups. I guess CB Insights would counter that team and product drive the momentum score.
There’s much more detail on their site here.
I’m interested for three reasons:
- Forward Partners might be able to use Mosaic score as part of our assessment of companies
- VCs might start using the Mosaic score as part of their evaluation when they look at our companies
- Forward Partners might be able to use the market component of the score to identify new market opportunities as they open up and use that for proactive deal sourcing
Having got that straight in my mind it’s clear we should sign up for a free trial and see what we can do.
The analysis looks thorough and I’m hopeful something will come out of it. Right now I can think of two reasons it might not work for us. Most importantly, I think the analysis is based on correlation not causation, and the score will stop being useful if companies deliberately manipulate some of the inputs (i.e. game the system). For example, the momentum score is partly based on the number of job openings at a company, which is easily manipulated. The second question I have is whether it will work well for the very young companies that we invest in, many of which are too small to have many momentum signals, are in markets that aren’t established enough to have sufficient volume of activity for CB Insights to track, and are too fledgling to have any financial strength.
Update: Earlier versions of this post erroneously referred to Mattermark instead of CB Insights.