20 Bay Area Startups Ripe for a Series A Investment

It’s been a couple years since we shifted our product development focus at Mattermark to supporting sales and marketing deal sourcing, but that doesn’t mean I’ve lost my love for speculating on which startups are most likely to raise funding next.

Living in San Francisco these past 8 years, I’ve noticed there are often companies that appear seemingly out of the blue and then raise a boatload of money. This was part of what inspired me to start Mattermark in the first place. Can we detect these companies earlier if we were paying closer attention to data exhaust they produce? If we were watching the web traffic, social media, mobile app downloads, and other signals around companies climb – even from super small numbers at first – could the slope of that growth tell us something about what a hot emerging company looks like in it’s earliest days.

I’ve spent over 4 years working on exploring these questions now, and it’s endlessly fascinating. Without further ado, here’s my list of Bay Area startups who haven’t announced a Series A funding round yet but should be on every venture capitalists shortlist:

This list is influenced by growth signals found in Mattermark (which is how I built my initial screen, as explained below) and then editorialized by me, based on a combination of what I think is interesting, trendy, backed back other investors with a track record of getting their seed investments graduated to the next stage. If you feel like your company should have been on this list just go raise a Series A, and prove me wrong!

Like this comic? Steve Hanov’s blog has a bunch more!

How I Built My Initial Screen

Mattermark has ~3K companies tagged with Bay Area and “Pre Series A”, which means they’ve raised some funding by not a Series A. When we increase this filter to also include all Bay Area companies with no known funding (like unannounced seed rounds) that number jumps to ~40K.

I wrote a Series A benchmarking analysis in January 2015 that determined the average Series A deal is announced when a company is at ~15 employees. I paid attention to companies approaching this size for my selection criteria, and also made sure the net team size had increased at least 1% over the past 6 months.

I’ve raised more than $18 million in funding for my company through several rounds, and I can confirm the rule of thumb that a company raises seed funding to last them 18+ months. Knowing this, I focused on companies who had gone at least 9 months since their funding announcement. With all these criteria applied, I’d already whittled the list down to just 477 companies (and yes if you click this link and sign up it is totally free to view it!). Btw, if you save this search with a name like “hot series A opportunities” Mattermark will automatically email you whenever a new company meets this criteria. This is exactly how the most data driven top tier VC firms in the business use us!

I realized after I wrote this that I had not placed an upper bound on months since last funding, and I didn’t want to get a lot of old dead companies in my list. So I put 24 months since last funding announcement as my maximum. Down to just 167 companies.


A Walk in The Land of Never Was: Lessons That Led to Green-Lighting Our Most Popular Feature

There are so many reasons not to do a thing. Fear, laziness, lack of skill or resources, and stubbornness all come to mind. But this year, I found a reason more dangerous than all of them, worse because its lackluster sound gives it the camouflage of dullness among a deluge of new shiny things.

The danger is in finding a great idea, but thinking it doesn’t matter and tossing it aside. “No, obviously we won’t do that,” is the catch phrase. Spoken with enough confidence, especially by someone powerful and respected who uses logic well, and that idea enters the Land of Never Was.

The Land of Never Was is the place where discarded ideas go to hang out. It’s the bottom of the backlog, the coldest corner of the icebox, the bottom right hand corner of the kanban board. It’s a mostly dull gray place; dusty, creased, redolent with the smell of crumpled and slowly disintegrating notebook pages and post-it notes that long ago lost their stick.

Around this time of year I like to take a vacation there, and walk along the shore of the Sea of Could Have Been with my little metal detector skimming the dunes for something shiny that I might have missed. Whenever I do this I keep my expectations low, so I’m not necessarily expecting to unearth any treasures, but it gives me an excuse to stare out at the horizon.

I’ve been working on my startup for nearly 5 years, and on startups overall for 10 years, so the sea has had a lot of time to break down and turn over the remnants. You’d think after all that time, walking the same stretch of beach, I’d find fewer and fewer items of interest, but it isn’t so. I keep finding new ways to circle back on old ideas, as my little detector beeps and I dig up some shiny scrap that I didn’t notice last time I wandered here.

“No, obviously we won’t do that.”

Self-help books are abuzz with find the life-changing magic of tidying up, saying ‘no’ more often, giving fewer fucks, and startup culture rewards being stubborn in a “Jobsian” ideal of the creative genius persona. For those of us who already drank all this Kool Aid and are tough stubborn self-directed intensely independent motherfuckers, I have a suggestion: take a walk on the shore of your own imagination, along your Sea of Could Have Been.

Find something you said “No” to that should have been a yes, and make it right.

It took us awhile to find this particular treasure, but we’re so happy that Mattermark now offers the ability to look up contact email addresses!

Also posted on Medium

Checking In On My Fantasy VC Portfolio From February 2014

I’ve been doing some updates to the good ol’ blog, and noticed a fun post from 2.5 years ago highlighting my picks at the time.

  • RelateIQ — I ended up investing in their Series C as a result of this post (their founder Steve Loughlin invested in Mattermark, and after 2 years at Salesforce he is now a partner at Accel Partners), and they were acquired by Salesforce 5 months later for $390 million.
  • Instacart — They were my Y Combinator batch-mates, and I still use them for all my grocery shopping. This pick seems super obvious now, but at the time they had only raised their Series A when I picked them.
  • Uber — I picked them because they were an early Twilio customer and I was already spending way too much on the service. This one was probably already obvious, but they had only raised $300M of funding at this point (versus > $15 BILLION now) so my fantasy portfolio definitely benefits!
  • Hired — I picked them because I love the founders, and my company has been a customer from the beginning and the service just gets better and better. They announced their $15M Series A just 6 weeks after this pick.
  • Digital Ocean — I originally picked them in June 2013 because I knew their bootstrap story and how loved they are in the developer community. They would announce their Series A shortly after my February 2014 post as well.
  • Product Hunt — I picked them because they reminded me of Referly and Launchgram, and Ryan Hoover has the X factor. They didn’t have any funding when I made this pick, and would announce their Seed round later that year.
  • Magisto — I picked them because I had recently paid for their mobile app, which I very rarely do. The company hasn’t announced more funding since then but remain among the top 10 grossing apps in the photo and video category in iTunes.

Funding Summary

Collectively, the companies in this list have raised $15.2 Billion in funding since this call… but obviously this is totally skewed by Uber. Excluding Uber, the other companies went from $65 million of collective funding to $609 million, and only 1 of them did not raise a follow-on round.

This is of course a fantasy fund, and if I were really trying to get results things like winning the deal would have to be factored in. But it’s still fun to see how these things play out… and important to remember these were not nearly so obvious (at least to me, maybe VCs disagree) at the time.

It was fun making this list, and exciting to follow along as these companies have grown and evolved over the past 2+ years. I can’t wait to see what they each do next! I love angel investing, and happily these days I’m putting my money where my mouth is.

Looking forward to putting out another list soon!