In the esoteric world of venture capital, it is rare for associates and partners - accustomed to making investments in companies and earning handsome returns - to get back to the grind of building a single company. However, that is exactly what Abhishek Goyal and Neha Singh chose to do. They quit their investment roles to build Tracxn, which is into market research and data analytics. It provides actionable intelligence on start-ups to venture funds, corporates as well as other investors.
The genesis of Tracxn actually was based on their own need, when both of them were working at venture firms. Goyal says he was part of the core team at Accel Partners handling investment into the likes of Flipkart and Commonfloor (eventually acquired by Quikr). Neha, an investment analyst at Sequoia's Indian operations, was part of the team, which invested in the likes of Practo and Freecharge (acquired by Snapdeal).
While their investment careers were chugging along, Goyal says they realised that by following the conventional VC route, they could impact probably 10 companies on a substantial scale. "Whereas through an idea like Tracxn, we could potentially impact thousands of start-ups. We wanted to bring efficiency to the start-up eco-system. One of the biggest pain points for start-ups was fund raising. By our work we could enable a lot more of them to do that by matching them to potential investors."
Both Goyal and Singh worked for competing firms. They scouted for investment opportunities in the same technology space. However, what brought them together was their love for coding. Not many hands-on coders end up being VCs. Singh had written a software program to shortlist companies at Sequoia based on certain metrics. "The VC community is fairly small and I discovered that Abhishek had similarly written code to help him scan companies, which led to commonality of interests."
So, when Singh quit Sequoia in 2012, they agreed it was time to leverage their expertise in identifying emerging areas and start-ups in that space. The revenue model evolved itself fairly simply from there. They sell on a 'subscription basis' reports to venture capital firms, corporates and investment banks looking for curated information on start-ups.
In June 2013, they launched Tracxn, which bills itself as a "start-up intelligence platform" and today tracks 230-plus sectors, including enterprise infrastructure, digital marketing, consumer, mobile, health and education. Tracxn was initially incubated in the Bay Area as a part of Lightspeed Ventures, incubation programme, but later moved bulk of its operations to India, given the cost advantage and "more importantly, the availability of talent here".
Tracxn focuses on emerging sectors. Goyal points out, for example, companies working in and around blockchain technologies or virtual reality gaming are currently hot in the US. If a VC firm was looking to invest in these areas, it would need to have an overall view of the sector, the key players involved and investment opportunities. This is where somebody like Tracxn comes in. It screens and filters and puts together all relevant information based on which the VC firm or a corporate can take an investment decision.
Zeroing in on the hot and upcoming sectors is a continuous and moving process dependent on data, which is where the expertise of Tracxn's 400 plus analysts comes into play. "We identify to our clients the investable space, the investable start-ups, even competitors, and can even provide landscape of a particular company if they are interested, etc.," claims Goyal.
Singh concurs that unlike a Venture Source or a Pitch Book, which collate information on investments made and happenings in the start-up world, Tracxn uses a combination of automated solution (including machine learning) and human intelligence to track developments across the world. "This is not historical information. This is current, actionable intelligence," she adds.
The company says it tracks thousands of companies across all geographies. Each of its analysts has developed expertise in a particular area and has knowledge of developments in that space. "Since that kind of expertise was not available globally, we had to build it," says Goyal.
Tracxn till date has attracted investments from angels like Ratan Tata, Sachin Bansal, Nandan Nilekani, Neeraj Arora (WhatsApp fame) and Mohandas Pai. Apart from this, SAIF Partners has also put money into the company.
Tracxn has 'disclosed funding' of $3.7 million publicly to date, but CrunchBase, the start-up database service, estimates that it has raised $13.5 million in four rounds of funding. The company counts the likes of Google Capital, EY, Andreesen Horowitz, Matrix Partners, Nexus Ventures, Microsoft Ventures, Westbridge Partners and Kalarri Capital among its 200-plus clients. Amongst corporates, Tracxn sells its research to Flipkart, Snapdeal, GE, IBM, Aditya Birla, Coca Cola, VMWare, Target and Bertelsmann. More than 30 of the Fortune 500 companies are its clients, says the company.
Each customer pays a minimum of $1,000-2,000 per month. Also Tracxn takes on customised research service requests from their clients. Former Infosys co-founder Nandan M. Nilekani, who is an angel investor in Tracxn, says that the company has a unique edge in its space and given the pedigree of its founders will go a long way. "They are doing a fabulous job in terms of execution."
Tracxn is now expanding its global footprint beyond the 20 countries where it already has a presence. This year it launched in Israel, South Korea, China, South-East Asia and Australia. The company says the eventual goal is to aim for 90 per cent gross margins. Data business is very lucrative and the promoters of the company say their intention is to build a global SaaS enterprise business in this space from here. They seem to be succeeding.