Early Metrics is a great example of technology that addresses a significant agency problem in the corporate rating market.
It also fills in an under-served part of the rating market, as it is
focused on the equity aspect of innovative tech SMEs and early stage ventures, instead of the credit part that most conventional rating agency address.
In practice currently, Early Metrics “plays” in the tech growth part of the market, with companies that have up to $20mil annual turnover. Naturally, startups are applying to be rated but Early Metrics ranks the “to be rated” pipeline as a function of the interests and focus of its clients. In simple words, their needs to be a match between the Early Metrics clients and the SME or startup, to move up the “to be rated” pipeline.
Early Metrics has already an established client base of corporates that has extremely low turnover. The art of growing their business successfully lies in sourcing high quality deal flow and matching it with their client base. Their “human” rating secrete sauce is explained in detail in their webinar “How human factors affect the growth of early stage ventures” (free to watch here).
There are other companies that gather data and offer benchmarking reports in the startup space, but not with a laser focus. Oddup is the better-known name in the startup rating space but has a broad focus (not tech focus necessarily) and is strictly data driven. Mattermark was another player who was sold (liquidation kind of transaction) in December to Full Contact (details here). StartupRanking focuses on social statistics (the SR web and the SR social).
In my opinion, the space has room for more service providers. Innovation in the rating methodology is needed and one way to develop the space is with a sector focus. An example is an impact startup rating service that can incorporate impact metrics. Impact metrics and innovation metrics are no low hanging fruit. Secret sauces can be developed for these.
“Early Metrics is growing and serves investors and blue-chip corporates such as Visa, LVMH, Barclays, Sanofi, and more.” They remain focused on bringing transparency to the rating process and serving the decision makers that fund innovation.