These Are the 50 Most Promising Startups You’ve Never Heard Of

There are a few early clues that a startup will be successful, according to market researcher Quid: Have the company’s founders worked together before? Is the business in a hot sector, one where many other new startups are also focusing? Has it raised funding at a quick pace? Based on those criteria and others, Quid looked at more than 50,000 companies and chose 50 it deemed the most promising.

While venture capitalists often try to assess startups’ potential one by one—at the moment they hear a pitch—some market researchers such as Quid are trying to crunch data on tens of thousands of startups to come up with their own set of best bets. This isn’t Quid’s first attempt to do this: In 2009, Businessweek asked Quid, then named YouNoodle, to pull together a list of 50 promising startups that were flying under the radar. Almost eight years later, it turns out that the list had its share of flops—companies that shut down or lost value—but some notable home runs as well. Cloudera, Palantir, Evernote, Twitch and Spotify all increased at least 30 times in value since 2009. If YouNoodle’s list had been a venture portfolio, it would have been one of the best-performing funds of the last two decades. So we asked Quid’s chief executive officer, Bob Goodson, to make a new list.

The companies, all founded in the past six years, have been raising money at an impressive clip—typically once every nine months, suggesting heavy interest among investors. The average business had already raised three rounds.

Investors had a particular interest in certain emerging sectors. Online security, fraud detection and artificial intelligence startups raised more than others on Quid’s list.

Which investors will benefit if these businesses do in fact expand to become the next Spotify or Palantir? These are the venture firms that have taken stakes in the most number of companies on the list of 50:

Here’s the full, sortable list of the 50 most promising startups from around the world, based on Quid’s research.

Quid began with a list of around 50,000 private companies that had received venture capital or venture debt in the past three years. The data on investment received, investors, location and founding year came from S&P Capital IQ and are current as of September 2016. Quid narrowed the list down to around 5,000 companies by keeping those that fell into one of three categories: 1) early-stage startups with low valuations that raised money quickly from a set of top venture capital firms; 2) higher-valuation companies that already showed traction in their industry; and 3) companies that were in a sector that Quid determined was an expanding market opportunity. Quid found these market opportunity areas by analyzing the company descriptions of startups and finding what sectors were most popular among companies founded in 2015 and 2016, plus which sectors raised the most money from the top five venture capital firms. (The list of top venture capital firms comes from a top fund-of-funds that declined to be named for compliance reasons.)

Quid narrowed the list from 5,000 to 200 by ranking the companies according to a series of metrics: time between funding rounds, number of rounds, quality of investors and amount raised. The list was then narrowed to 50 by looking at such other metrics as whether the founders had worked together before (considered a plus), where the founding team had gone to school and how many employees the company had. Quid’s Goodson also made subjective decisions about which companies seemed most promising, just as he did with the 2009 list. Goodson also excluded companies that had had extensive press coverage already. Quid declined to disclose numeric scores or exact formulas that it used to rank companies in the final stages.

The final list was shaped by some preset parameters: Biotech was excluded, and 10 of the companies were from outside the U.S. Note: One company, EyeVerify, was acquired in September, around the time the list was being made. Otherwise, all companies are independent.

Added on March 6: Since this story’s publication, a few companies (noted with an asterisk in the table above) have contacted us to amend funding details or to disclose the size of previously undisclosed rounds. Mad Street Den said its August 2016 funding round was more than $4 million, bringing its total to more than $5.5 million. NewStore said it raised $8.7 million in February 2015, $30 million in July 2015 and $1.7 million in January 2016, bringing its total to $40.4 million. In addition, we updated this story with Soil IQ’s more commonly known company name of Edyn, and we’ve amended the company name of Mad Street Den Systems, which was renamed Mad Street Den, and Vespr, which was renamed Socratic. Lastly, we added another office location for Mad Street Den, which is now headquartered in San Francisco but was previously headquartered in Chennai, where it still has a larger office.

Source: Capital IQ, various databases, all via Quid

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