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Friday, July 19, 2024

Synaptic uses tech to help VCs find their next unicorn in India & overseas

Synaptic, a SaaS platform founded in 2016, attempts to bring together disparate data sources on a single platform, package them with firms’ internal data, and provide insights for venture capitalists.

Venture capital (VC) is a high-risk, high-reward investment strategy. The important questions for an investor are which firms are the most promising and if they are worth investing in.

With so many investment possibilities and company presentations to choose from, venture capitalists (VCs) frequently have a set of criteria that they look for and consider before making an investment choice. However, evaluation criteria are expanding beyond cold algorithms and traditional data sources such as financial records in order to make financing decisions or follow the form of an existing portfolio.

Enter the phrase ‘alternative data.’

Alternative data, usually referred to as external data, is information gathered from non-traditional data sources. It might be as insignificant as app downloads, tracking hiring and firing, customer engagement (tickets raised), online traffic, credit card transactions, social media mood, funding, and so forth.

Given market volatility and the high-risk financing game, the majority of VCs are increasingly looking to these new forms of data sets to get an informational advantage over the competition.

Synaptic, a Gurugram-based business, intends to bring these alternative data sets, which are currently accessible in silos in the market, to a single platform, package them with firms’ internal data, and provide insights for VCs.

Businesses and investors may use the standardised and automated data in the form of dashboards to find and follow firms of interest, manage their current portfolios, and do additional market research.

The six-year-old SaaS application is utilized by worldwide VC and private equity companies, hedge funds, and asset managers in markets throughout the United States and the United Kingdom.

Following several experiences at IT organizations, IIT Kanpur grads Anurag Abbott and Rohit Razdan founded Invelocity Labs in 2013.

While integrating technological capabilities in businesses, one of their clients, Vy Capital (an AuM global technology investment firm), requested the duo to join its Dubai branch and work on developing its internal analytical system.

After 12 months of operation, the business was shut down, and the co-founders and their staff joined the VC firm’s data and analytics sector.

For the first time, the techies gained insight into how venture capitalists work and analyze their portfolios.

Rohit explains, “We were working on developing an internal tool (Synaptic 1.0) for Vy Capital to assist them in tracking sentiments throughout earnings calls for a firm. Surprisingly, VCs are still not extremely data-driven. They have data access, but you must make it useable and give a value proposition. We already knew what VCs wanted, so we needed a platform to serve that.”

The technology produced the intended results, and the team saw a larger possibility because many investors were looking for transactions in startup ecosystems, including India.

Vy Capital Founder Alexander Tamas encouraged the techies to spin out Synaptic as an independent firm in 2016 and relocate to Gurugram.

Dashboard synaptic

The proverbial needle in a haystack. The Synaptic platform gathers information from a variety of third-party sources, including G2Labs, Crunchbase, and Similarweb, in addition to the company’ own website, applications, social media, and financial activities.

The data is then loaded into their proprietary technology, which employs analytics toolkits to construct research processes in the form of dashboards for investors.

Over 100 performance measures or “positive signals” are provided by the dashboard, including online and mobile traffic, SEO data, employee statistics, product reviews, developer activity, search trends, financing, reviews, and so on.

Filters may be used by investors to extract competitive analyses, financial growth, and consumer patterns from existing portfolios as well as new prospective enterprises across geographies.

“Across countries, there are hundreds of not-so-obvious businesses. Investors are actively searching to invest in such firms, and we give comprehensive intelligence on them. One of our key differentiators is our speed,” Anurag explains.

It is vital to note that the platform does not currently give detailed forecasting metrics for firms or reports, but rather information based on historical and current data for real-time tracking.

“The analytics enable a type of implicit forecasting,” said the co-founders.

One of the toughest challenges is combining data from several sources, notably web and applications.

Synaptic has also created a Growth Index, which includes a list of notable companies/startups for prospective acquisition sourcing.

Models of business and revenue

Synaptic charges a customizable yearly membership cost for its SaaS solution, with values ranging from approximately $110,000 to hundreds of dollars. The platform is used by over 50 clients in the United States and the United Kingdom, including multinational venture capital firms with a presence in India, and is in high demand in Latin America. It employs 80 people across three offices in Gurugram, Bengaluru, and New York.

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