Funding Round and the Next Steps
SignalRank announces March 2023 Funding and AI plans
SignalRank’s purpose is to bring data analytics and AI to the venture ecosystem to improve it for all stakeholders. SignalRank applies data analytics to Investors, Companies and Funding Rounds. SignalRank has now closed a second round of funding and is now ready to deploy up to $1m of capital per round to support seed and Series A investors to do their pro-rata in qualified Series B rounds.
Funding Round Closed
On 31 March 2023, as expected, SignalRank’s first preferred stock sale closed. These have not been the best times to attempt to raise capital, but we are proud to have done so. Read our first newsletter to understand the background.
Shares were priced at $25 a share, and post-close the company has now raised about $9m.
Venture Market Analytics
SignalRank is starting to invest in a slowing market for high-quality Series B rounds.
2023, year to date, our algorithm has recommended 19 Series B rounds from 399 total rounds. That is 4.76% of all Series B Rounds.
See Table 1 below for the 2023 high-quality Series B rounds selected by SignalRank AI. Thanks to Crunchbase for the raw data used by our algorithms.
I thought it might be a good idea to put 2023 into context. Here are the numbers for the same days (1 January-11 April) from 2017 through 2023.
When we compare the 399 Series B rounds in 2023, year to date, to the same date ranges from the two prior years, we can confirm two things. Firstly there are many fewer Series B rounds happening. There were 768 Series B rounds in the same period in 2022 and 633 in 2021. And secondly that our algorithm recommends a far lower % in 2023. It would have recommended 102 Series Bs in 2022 and 55 in 2021. 12.98% and 8.3%, respectively compared to only 4.76% in 2023. You would have to go back to 2017 and 2018 for SignalRank AI to recommend 4.43% (2018) and 3.75% (2017) of Series Bs to get close to the 2023 selection ratio.
Here are the charts visualizing that. The black bars represent the total Series B round market. The red represents SignalRank AI performance.
Why Recommendations Matter
Successfully closing a funding round in 2023 is no easy task, as the numbers show. We succeeded because investors can see that SignalRank AI’s recommendations significantly outperform the already good Series B market. Table 2 above measures that by looking at the percentage of unicorns produced by the model and the multiple of invested capital produced since the Series B round. The charts below bring those numbers to life.
So far, the 2017 SignalRank AI recommendations produced a 735% average gain since Series B; 2018, 1102%; 2019, 568% and 2020, 343%. Even 2021 recommendations have reached 245% despite being so recent.
2022 and 2023 have not had sufficient time to mature, and so are all at par value with Series B.
25% of the recommended Series B rounds from 2017 are unicorns, and 30% of the 2018 recommendations. The rest still have time to mature and grow. It is likely the 2021 number is inflated due to the unusually high valuations paid at Series B in that year and 2022. Notwithstanding those years, the numbers suggest that 25-30% of SignalRank AI's recommendations will become unicorns.
The Next Steps
The market for quality Series Bs is still large
Our 80-plus seed partners report over 100 or so of their companies are planning a 2023 Series B. Perhaps 70 to 80 companies will qualify for our capital by year’s end. Their average raise will collectively be $60m per round or $4.2 bn. This is a target pro-rata of plus/minus $420m for 100% of the 2023 pro-rata opportunity.
To execute against the 2023 opportunity, the SignalRank board decided to increase our capital raises to a monthly cadence.
SignalRank AI recommendations will help our seed and Series A partners maximize the returns from our investment in their Series B pro-rata opportunities. At a time when opportunity funds are of questionable value and one-off special purpose vehicles are hard to organize and fund, a systematic source of capital able to be drawn on quickly for the best opportunities is a wonderful solution.
The AI selections usually correlate to the companies our fund partners consider in the top decile of their portfolio. As such, there is a win-win alignment of interests with SignalRank.
And the impact of steering capital into the most likely growth prospects produces a significant increase in the earnings fund managers can make from profits, known as carry or carried interest.
Historically it is during market corrections that the best future investments in private companies happen.
SignalRank.ai is close to being launched. It will offer investment products powered by our algorithms. Initially, our pro-rata as a service product, with a pipeline of high-scoring companies following their seed rounds (1 signal), Series A rounds (2 signals), and Series B rounds (3 signals, Index entrants).
Investors focused on any stage will benefit from leveraging SignalRank AI in helping them focus on the high-scoring companies at that stage. It will also support venture-debt providers in de-risking allocations and LPs seeking to de-risk fund commitments. Just as SignalRank allocates capital today to Series B rounds via pro-rata, SignalRank.ai will be a path to market for debt and fund investment products seeking to allocate with the benefit of predictive data analytics.
Until now, our investors have had free access to our predictive analytics at https://investorportal.signalrank.co. Others could try it for 30 days. At launch, we will reduce the trial period to 7 days. Our investors will have 12 months of free access.
Pricing for access to the data-driven investment product set will start at $30,000 per seat per year.
We will report progress regularly as SignalRank executes and look forward to executing well in a very good environment for our products.
Keith Teare, CEO, 4/13/2023
This is a public newsletter from SignalRank Corporation. SignalRank is a Fintech and AI company operating in the venture capital space.
SignalRank’s purpose is to bring data analytics and AI to the venture ecosystem to improve it for all stakeholders. We apply data analytics to Investors, Companies and Funding Rounds. Our first investment product supports seed and Series A investors for their pro-rata investments at Series B in their fastest-growing companies. We plan to become a public company to enable regular investors to benefit from the high growth of the companies our AI selects. It will be an index of the top-performing Series B companies.
Our investors include Candou Ventures, Garry Tan, Lip-Bu Tan, Dan Rose Chairman of Coatue Ventures, Blake Grossman former Blackrock Vice Chair , George Cohelo and Eric Archambeau Balderton founders, “Tiger Cub” Glen Kacher, Tim Draper, Vint Cerf, Altair Growth Ventures, Harris Barton, Erez Galonska of InFarm, Karol Marcin, Mohammed Al-Khatar of MKaNN Holding LLC, Charlie Jadallah of Darwin Ventures, Marc McCabe, Anna and James Potts and a host of others.
Investors will want to place capital into SignalRank to take advantage of these best-in-class growth numbers. To do so you must be an accredited investor, or a qualified investor.
If you are an accredited or qualified investor and want to know more, don't hesitate to contact email@example.com for more information. If you are a seed or Series A investor curious about our pro-rata as a service product, please contact firstname.lastname@example.org
The newsletter is not intended as investment advice or a solicitation. All data regarding past performance cannot be relied upon to indicate future performance.