There are over 200K middle-market companies in the US that are estimated to earn over $10T in revenue and employ over 50M workers. Despite the size of this massive market, there hasn’t been a tremendous amount of attention in terms of intelligence on these companies at both an aggregate or individual level. Grata is a powerful intelligence engine focused on private companies. The company addresses a common problem that business development professionals in private equity, corporate development, and management consulting companies face – the inability to discover relevant, up-to-date information on millions of companies. Combining a blend of web crawling technology, machine learning, and natural language processing, Grata’s automation saves countless hours of time spent manual searching while prospecting and qualifying. In 2021, the company grew 8x.
AlleyWatch caught up with Grata Cofounder and CEO Andrew Bocskocsky to learn more about the inspiration for the business, the company’s strategic plans, latest round of funding, which brings the total funding raised to $34.5M, and much, much more…
Who were your investors and how much did you raise?
This most recent round was our Series A ($25M) led by Craft Ventures. Teamworthy Ventures, Altai Ventures, and Eigen Ventures also joined our existing investors: Bling, Accomplice, Touchdown Ventures, and current and former M&A executives. Grata’s total funding to date is $35M.
Tell us about the product or service that Grata offers.
Grata is a private company intelligence engine that makes it easy to find and research middle-market companies. Private equity firms, private market investors, banks, consulting firms, and corporate development teams use Grata to source deals.
What inspired the start of Grata?
We started Grata when we independently realized how hard it was to find information on middle-market companies.
Nevin was a consultant at McKinsey before moving to PE where he spent countless hours researching middle-market companies. He saw the trend of how more firms were interested in the middle market, from hedge funds and large asset managers to family offices and search funds. With more competition, he saw the need for better business development (called “proprietary sourcing” in M&A) powered by better technology.
Before Grata, I was building a machine learning software consulting business. We were developing systems for companies that wanted to leverage private company intelligence. Unfortunately, the private company data at the time was limited, out-of-date and often incorrect. The opportunity I saw was the spike in middle-market companies forming websites (~2x in 2017), which has only accelerated through COVID. Before Grata, this exponential amount of unstructured information that companies post on their websites was untapped, unindexed, and could only be captured manually.
How is Grata different?
We built the first company search engine, turning the internet into a “B2B database.” No one’s done that before because it’s really hard.
The incumbents in our space attempt to solve this problem with manual processes that simply cannot keep up with the scale and dynamics of the middle market. Once companies are added to Grata, they’re then updated to capture even the smallest changes on their website to larger changes like ownership transitions, funding events, new executives, and others. This ensures that our customers get the most accurate and comprehensive information before their peers.
What market does Grata target and how big is it?
Grata targets the market for middle-market company information. Within our target segments of dealmakers, which include private equity firms, corporate development teams, consultants, investment bankers, and other private market investors, we estimate the global spend to be $15B.
What’s your business model?
Software as a service (SaaS).
What are your post-COVID office plans??
We currently support a hybrid work environment and plan to continue after COVID. Our Flatiron-based office supports a growing New York team that works in person three days per week. We offer flexibility to work from home two days per week and have a few full-time remote employees on our team.
What was the funding process like?
The funding process for this round was unexpected (happened earlier than we had planned) but fairly straightforward. Craft had initially reached out to us right after our Seed Round in 2020. We built a great relationship over time so, when it came to our Series A, they already knew the business, the market, and the founding team. They were able to move quickly and front step a broader process.
What are the biggest challenges that you faced while raising capital?
One thing that challenged us was selecting the right partner. So many amazing people were interested (a lot of our customers wanted to invest!) but we had to pick the select few that we felt were the best fit for Grata today. The silver lining is that, just like last time, we formed some great relationships that we plan to revisit for future rounds.
What factors about your business led your investors to write the check?
I think it was a great product backed by strong growth in an expanding market – kind of a perfect storm that made the process smooth. We grew ARR 8X in 2021. Our customer base also loves our product and it shows in our usage, retention, and NPS. Additionally, the opportunity is much larger than you’d think because of the expanded interest in the middle market from other investors like hedge funds, asset managers, family offices, VCs, search funds, and, of course, corporates.
What are the milestones you plan to achieve in the next six months?
Our team size will grow by roughly 50% and in that time we hope to have doubled our current ARR.
We’re also releasing bold features around private company financials, never-before-seen data points (more to come soon), and an updated search UI!
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Don’t be afraid to make big bets but measure those bets carefully so you don’t overspend. Experiment, measure, repeat.
Where do you see the company going now over the near term?
Physically, we’re not leaving NYC anytime soon. From a strategic perspective, we’re planning to spend about $20M on product development this year. That means our engineering team will be hard at work developing new features like private company financials, personalized recommendations, and new ways to contact business owners.
What’s your favorite outdoor dining restaurant in NYC?
I’m a huge fan of Jean-Georges’ restaurants for special occasions. ABCV is right by our office and has amazing healthy food!
