This week's 1001 startup idea is to establish a company which would mine, aggregate and analyse company data. This data would be used by other providers for due diligence, analysis, research and bench marking.
The number of small and self-owned businesses are growing at a frantic pace globally, thanks to the advent of internet and technology advances. Most of these business look for data points to set the benchmark or to analyse their performance before they take a plunge. According to World bank, about 3.1 million new businesses get launched every year across the world, thereby giving the new entrants a solid opportunity to encash on.
There are few companies which offer similar services like Company Check and Duedil. These companies charge per company for analysing company data. The current players offer base level data free of cost and for advanced data points, the user pays a nominal fee. Most of the big player’s are clustered in Europe and USA as collating data is easier in advanced economies, but there are few players in Asia Pacific and Africa region.
Pain Point & Target Audience
The targeted customer market for this business is the "investors and entrepreneurs looking for data to validate their decision". For Investors, there is a huge cost involved in conducting due diligence for making an investment. They end up hiring lawyers and financial analysts for due diligence. For businesses and entrepreneurs, it is essential that they know the viability of the businesses they are planning to start. These are two big pain areas that this startup should plan to address.
This company through a secure web-based portal will offer a subscription, through which users can log in and check the financial health, news reports, registry data, intellectual property rights data, competitor info, industry benchmarks, growth rate, bad debts and other related information at one place.
The startup will have a B2B freemium model:
- The first set of information will be available for free for customers (based on last financial year filings);
- The second set of information like some analysis on the worth etc. will be available for a small cost; and
Once the startup gains traction, as an additional service line, the company can also start a product where companies outsourced teams can visit the subject company's office for conducting diligence and offer reports at an additional fee.
Way to market
The way to market would be to tie up with fund houses which invest in various companies. It would be easier to sell the product to these fund houses as an alternative mode for them to conduct the preliminary diligence of a company. It may be a good idea to start this in one of the Asian economies and then spread across Asia. Asia has one of the highest growth rate projections and hence will see higher investor demand.
This is a B2B model and the growth would be dependent on the revenues and the number of users on the free plan offered by it. Therefore, in the first year of the startup, it should aim at tying up with 10 fund houses and have 1000 subscribers under the free plan offered by it.
Investment Needed For Prototyp For testing & building the prototype, pitch fo raising 50K USD from angel investors or incubators. This business would fall under the big data category and some of the prominent accelerators in this segment are Data Elite, the Data Incubator, Incubio and Standord's StartX Accelerator. There should be no office rentals or salary payout; the entire budget should be apportioned for customer acquisition and technology.
You would need to have a chartered accountant who has the relevant experience in conducting financial analysis and a tech expert in the team to build the web interface. In addition to this, you would need a financial analyst and a big data expert on the team to make sense of the aggregated data.
Investors / Expert Take
Duedil raised USD 17 million in 2014 in a round led by Oak Investment Partners. There is huge interest in big data companies across the globe and a good product which is able to show customer interest generates reasonable interest from the investors. There is enough evidence in the form of success of companies like Duedil and Company Check, therefore, if the Company is able to generate interest from customers, it will build a solid business in the years to come. In case you are looking forward to getting started on this idea and need any help, please do contact us at YoStartups.com and we will be more than happy to assist you in building this business from scratch.