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A Guide On Using Startup Data for Better Data-Driven Investment Choices

Author Image By Ashish Dwivedi

May 25, 2023

18 minutes

Data is one of the most important tools that startup investors use in their investment decision-making to succeed. Through analyzing data and information available on various companies, you can discover startups that have great potential to succeed in the future.

The hardest part about finding a promising startup is identifying opportunities and challenges, analyzing the market, and seeing patterns and trends overall.

What is a Startup Database?

Startup data makes up a whole database that provides a listing of founders as well as other relevant information. Information about founders includes all the details you need starting with the founder’s experience and education to the founded company information.

Datasets can also include other relevant startup details such as metrics to track and forecast, customer behavior, and various test results. 

Most common use cases of Startup Data

Now that we have established what exactly a startup database let’s look into various ways you can use it. 

Thorough Market Research

Startup data will provide you with in-depth, comprehensive overviews of companies, people, and investors. You can seek out details about both private and public companies, as well as factors about their well-being. 

Competitive Insights

Finding a startup company is important, but what’s more important is its competitors. Receive timely updates on companies you want to keep track of, and reports about their resources and developments. 

Improved Lead Generation

With a startup database, you’ll be able to capitalize on more opportunities ahead of your competitors. Receive access to companies’ new funding, mergers and acquisitions, and hiring of new executives, which can provide an excellent startup opportunity. 14% of startups fail because they are unable to understand the personalized needs of customers or overlook them.

The benefits of using data for Startups

A data-driven decision will always overrule a decision made randomly, and surely this implies for startups. Look into the benefits of startup data: 

  • Identify trends and patterns in startup data. This can help improve your decisions in ways you never thought. 42% of startups fail because they misread the current market demand. 
  • Pin down what areas of business are most profitable and which need more recognition. You’ll be able to prioritize your resources in the right direction, ones that are most likely to succeed. 
  • Track how users are interacting, their behavior, and feedback on the services they’re using. This will help you make better decisions, ones that will cater to the needs of a user.
  • Startup data will help you measure the success of a product or service, as well as the success of a company both long-term and short-term. 

How to discover a potentially successful startup?

To choose the best startup for you, you must research because only 40% of startups can become profitable. If you follow the next steps and use startup data, you are likely to discover a successful startup.

  1. Define your investment goals. Define your goals and capabilities, and then assess which startups are a good fit for your portfolio. 
  2. Research the industry and companies. This is where startup data will be very necessary, you need to analyze all the details about a company. 
  3. Consider the financials. Carefully consider the financials of a company, and analyze the company revenue, expenses, profitability, and financial history with possible red flags. 
  4. Understand the competitive landscape. Even after finding the perfect investment company, you need to check out the competitors, this can save you from potential threats. 
  5. Examine risks. Any kind of startup investing includes risks, you must examine them and have an extra plan in case one of them happens. 
  6. Negotiate and structure the deal. Once you have made the final decision and are ready to move forward with an investment, you should negotiate and structure the deal in a way that’s advantageous for you. 
  7. Monitor your investments. Once you have invested in a startup that doesn’t allow you to relax, you should still be keeping track of milestones, and the latest news, attend board meetings, and keep tabs on competitors. 

Conclusion

To sum up, startup databases are powerful tools that can help you make the right decisions and get you to the top. However, you must remember that you should analyze each decision you want to make. With curated steps and informed decisions, your startup will succeed.

Author Bio:

Alyssa Taylor is a content writer specializing in the data analysis field. She has 5 years of experience researching data impact on business decision-making.

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