France-based 73 Strings — a service that helps investors like VC firms, private equity and asset managers with startup valuations and portfolio monitoring — has raised a $10m Series A round from Blackstone and FISV.
What does it do?
73 Strings has two halves to its product: a data collection tool and a startup valuation tool. The data collection tool scrapes Excel spreadsheets, emails and PDF documents for essential company information. Using natural language processing, the tool can also gradually learn about different industries or startups to improve the specificity of descriptions and categories for the data it pulls.
Its valuation tool can be tailored for different types of investor, says CEO Yann Magnan: the specificity of analysis can be scaled up or down depending on needs, there are multiple valuation methods to pick from and either or both of the data collection and valuation services can be included in the package. Different investors calculate valuation differently; VCs might use the valuation a company could eventually exit at whereas PE firms often focus on future cashflow potential, for example.
The platform can also help investors assess a startup’s peers and comparables to find valuation correlations and benchmarks, along with flagging similar companies “like Netflix suggestions”, explains Magnan. Clients pay a subscription fee to use the service which will vary depending on the detail included, but ranges from low to mid-thousands of euros.
Where will the cash go?
The team plans to boost its headcount, particularly in product roles, and will hire across offices in Paris, London, New York and Canada. It’ll also grow its tech team based in India, where the company’s CTO and CPO are based, and consider opening other offshore locations to support more clients.
Who invested — and who’s using it now?
The round came from US-based VC Blackstone and Fidelity International Strategic Ventures (FISV). Though Magnan can't confirm if these firms already use the service to value potential investments, he does say that both companies have tested the software “very heavily”.
The Series A is the company’s first official round of funding since its launch in 2019; the business was previously financed by cash made from operations, some family office funds and capital from friends and family.
Any private equity investor can use the platform, says Magnan, and the company currently has a “well-balanced portfolio” of PE, VC and private credit firms. Clients include Paris-based Sofinnova Ventures, a large London-based private equity firm, pension funds in Canada and a handful of firms based in the Middle East.
Who else is in the space?
73 Strings isn't the sole operator in its field — other companies that help investors collect company data and monitor their portfolio include Chronograph and Cobalt from the US, along with Polish startup Rundit. There aren’t many in the market, however, that combine the data monitoring facility with a flexible valuation tool in one platform.
The service that 73 Strings provides is usually a task for a junior analyst at a VC firm — but rather than making these roles redundant, Magnan says that the business is actually doing these employees a favour. Junior employees join firms because they want to be investing, he says, and 73 Strings automates some of the data collection that would usually detract from opportunities to get involved in deals.
It also means that the valuation and data collection jobs can be centralised to a couple of people plus 73 Strings’ service, rather than requiring a whole investment team to work on the tasks.