Funding intelligence vendor Crunchbase closed on a $50 million Series D led by Alignment Growth, with OMERS Ventures, Mayfield, and Emergence Capital also participating. The oversubscribed round raised total funding to $106.5 million.
“Investors we spoke with echoed the trends we’re seeing in Crunchbase data: We are in the middle of one of the most challenging times for startups to raise,” blogged Crunchbase CEO Jager McConnell. “So, the fact that we had more firms trying to invest in us than we were even looking for is a huge vote of confidence in our company, brand, and the products we’ve built.”
Jager noted that the firm has moved beyond funding data for PE and VC firms to a broader information platform that supports sales, recruiting, finance, and business development professionals. I would add Competitive and Market Intelligence professionals to their user list as I regularly use Crunchbase and Owler for deal intelligence.
Crunchbase began as a funding database at TechCrunch but was spun out as an independent organization in 2015 and has evolved into a sales intelligence service. The Crunchbase Pro offering supports company discovery, qualification, tracking, Salesforce syncing, and engagement (via contact data and email templates) at a low price ($49 per month billed annually).
“As difficult economic conditions impact more companies, knowing whether a target account is on the upswing or not gives prospectors the power to focus outreach on decision-makers with buying power,” McConnell said. “Our tools encourage account-based selling, which encourages deal-makers to prioritize their prospecting efforts based on the companies they should be contacting rather than the individuals. This is the opposite approach to ‘spray and pray,’ which relies on massive contact lists and leads to the kind of spammy outreach that no one likes.”
Recent enhancements include territory filters, diversity flags, machine-learning company recommendations, a Chrome extension, and email alerts for priority accounts, lists, and saved searches. They also added a contacts database and email templates.
Crunchbase has retained its focus on emerging (funded) companies. This focus is both an advantage and disadvantage. Emerging companies are often the fastest growing businesses with expanding needs and fewer incumbent vendors that need to be displaced. They are also more open to cutting-edge technology, encourage quick decision-making, and are less risk averse. Conversely, they represent a relatively small percentage of the overall economy, deals are smaller (but with significant upside at renewal), and they are more subject to economic volatility.
Another advantage of focusing on emerging companies is that the leading sales intelligence databases have weak coverage of these firms. When companies collect or ingest data on global companies of all sizes, they lack the editorial bandwidth to deliver detailed information on emerging companies. Specialist databases such as Crunchbase offer funding details, acquisition histories, editorially-written business descriptions, and more accurate sizing data.
“The Crunchbase SaaS platform combines rich and proprietary company data with direct access to decision-makers within a single intuitive interface—at compelling price points—making it a powerful tool for driving ROI across a variety of use cases, from sales to recruiting and more,” stated new Crunchbase Board member Alex Iosilevich from Alignment Growth. “We expect that Crunchbase will continue to gain accelerated industry adoption and are excited to support the company’s growth momentum alongside strong participation from the existing investor group.”
Crunchbase continues to grow its product and data. It supports 75 million unique annual users and over 60,000 customers. Furthermore, SaaS products drove a 5x year-over-year increase in new recurring revenue in Q1 2022.
“We took a step back from rapid growth in favor of a more measured, balanced approach,” stated McConnell, who noted that the firm has focused on capital-efficient growth. The firm dialed back its Burn Multiple from 3 ($3 spent to acquire $1 in new ARR) in 2019 to 0.22 in H1.
“The recent onslaught of down rounds and mass layoffs from companies who very recently hit unicorn status shows how outsized burn rates can be hidden behind oversized funding rounds, covering up the reality of weak business fundamentals,” McConnell said. “I’m especially proud of the fact that we have been able to generate growth while keeping our burn rate in check. In the first half of this year, we drove $9 million net new ARR at only $2 million burn — that’s best in class according to Bessemer’s efficiency benchmarks and puts us on the path to profitability…We plan to double our business-to-business software ARR this year, ending around $38 million in ARR just for this customer segment.”
Iosilevech argued that Crunchbase is well-positioned for ongoing growth and does not expect follow-on rounds. “They’re managing the business in a capital-efficient way so that the capital that they raise will really be the last round they need before a major milestone in the company’s history, whether it’s an IPO or something else.”
Funds will be deployed towards additional headcount and expanding platform functionality, beginning with a HubSpot connector. The firm is also looking to expand its machine-learning recommendations for sales, expand its data insights, and add usage tracking dashboards “to help customers track efficacy of activities on Crunchbase, along with the number of opportunities and ARR available to them.”
Crunchbase has grown to 220 employees with a remote-first operational model. It added seventy staff during the first half of the year and is aiming to add another fifty-five employees before year’s end. It was cash flow positive in Q1.
Crunchbase did not disclose its new valuation figures.