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Why Private Funding Data is Often Wrong

When performing market research, it can be helpful to review how much private funding a company has received and where that funding came from. Unfortunately, for a variety of reasons, the sources of this data are often incomplete or inaccurate.

Funding data provides great insights into the capital a company has to fuel its activities and who has signed up to support and rally around the company as it grows. These insights are helpful to understand the maturity, momentum and potential outlook of a company. Also, rolling up this data as analysis on multiple companies can help you identify trends in market growth as a whole.

Let’s take a look at where to get funding data and how private funding regulations and other factors can affect the accuracy of the information you find.

SEC Regulation D

The Securities and Exchange Commission (SEC) Regulation D enables companies to obtain funding through private investors —  what we commonly think of as funding rounds in the startup space — as a quicker and lower-cost alternative to initial public offerings.

SEC Regulation D is normally accompanied by the Form D filing, which is then made public on the SEC Edgar Database. (There are some exemptions that allow companies to not file Form D as long as certain requirements are met, such as providing sufficient investor information and ensuring investors are accredited.)

In a small startup-related sample set we took, however, we found that roughly 50% of the related investments were either not filed in the SEC Edgar Database or were not easily found because of naming inconsistencies.

Early Equity Isn’t Accounted For

We’ve also found that a lot of very early rounds are not accounted for in private funding data sources. Founders put their own money in at the beginning of a company and may also rely on early angel investors or silent partners.

These early investments are so key, because the investors often become some of the largest shareholders throughout the early years of a company. Without this information, you might not understand the true capital allocations.

Funding Data Sources

There are several websites where you can find private funding data. The sources of data on these sites are typically a combination of regulatory filings, manual private company data research and crowdsourcing.

With hundreds of data points on more than 1 million companies, the York IE Fuel platform offers the most comprehensive data set for private funding and other information you need to conduct thorough market research.

Whether you’re looking into a company for a potential investment, or you’re an entrepreneur or operator doing market and competitive intelligence, it’s important to get the full picture on the companies you’re researching. Get started with Fuel today.

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