Promising Startups | Hacker News Reader

Promising Startups

bloomberg.com

149 pointsayanai45 comments

This article's main table suffers from the inaccurate assumption that funding round size and frequency correlates with promise. What's worse, Quid is including a "hotness" factor for the sector the startups work in, so the piece can be sure to include the most faddish, hyped technologies currently in SV. Not impressed, but great PR for Quid.

I agree. The numbers they provided are absolutely useless.

Better numbers would be "Size of last round", "Days since last round", "Valuation of last round", and "Founder ownership after last round".

Companies routinely lie about when funding round happen to maximize news impact. They'll generally sit on the news until they can announce it with some other big feature or release or something (because they know without fail all the tech news will report fundraising rounds).

So "days since last fundraising" or "days between fundraising rounds" are going to be very inaccurate metrics.

I'm very out of the VC funding route-loop. Is the time between funding rounds really measured in days, these days?

Correlating VC investment to promise is a bit of a leap. Identifying hot VCs by the number of promising startups in their portfolio, when "promise" is based on VC investment, is a bit crazy.

The Breakout List seems to be a better list of "hot startups." It's still VC heavy, but there are a few other companies listed that aren't your traditional VC-backed startup. The companies listed are going after large markets (for the most part), growing fast in terms of revenue and generally have good financial backing (although that's not a prerequisite from what I can gather).

https://breakoutlist.com/

"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."

Am I crazy, or has only one of those companies (Twitch) actually made it to a liquidity event for its investors? There are some serious doubts around some of those "home run" companies keeping anything near their crazy private caluations.

Exactly. It's hard to say that they've had massive successes when none of the companies have returned money to their investors. That's proof that you've succeeded. The rigor imposed by the SEC makes it a lot harder to fake/inflate the valuations.

That said, I think all of those companies have done great things. Spotify, for instance, has revolutionized the music industry, and Palantir is a major player when it comes to government software (my employer competes with them in Canada).

There's a list of companies that have raised money but it doesn't appear that there's a list of companies that are profitable. Disappointing that only VC-funded startups are highlighted.

Quid began with a list of around 50,000 private companies that had received venture capital or venture debt in the past three years

Ohhhhh. There's the problem.

Some of the best startups I worked for were self funded and avoided VC money. The growth was slower, but the products we put out tended to be better vetted, better coded and far more stable.

Both places were a joy to work at since you were mainly concerned with the quality of the product you were producing instead of how fast you could get it to market.

It's because you can only fool your customers/clients for so long before they realize your product is garbage. If you have poor quality you need to have a lot of support staff to deal with the calls/emails or you need to have deep pockets to offer discounts and refunds repeatedly.

It's so fucked to read about VC-funded startups and read Paul Graham's earlier essays because he pretty much summed up a startup as "move as fast as possible to build a product that your customers want" and emphasized quality. Somewhere along the line, getting VC funds somehow has dwarfed that goal.

He was of course not a huge fan of VCs

>Back in 1997, one of our competitors raised $20 million in a single round of VC funding. This was at the time more than the valuation of our entire company. Was I worried? Not at all: I was delighted. It was like watching a car you're chasing turn down a street that you know has no outlet...

etc (http://www.paulgraham.com/venturecapital.html)

and yet YC is the center of the universe for SV VC-funded tech startups.

What do you think changed? Did PG change his view on things, or did the industry change?

A LOT can happen over 15+ years, and considering how fast SV and the tech industry moves, that's almost an eternity.

I couldn't say for sure. The cynic in me wants to point to the amount of money in software VC, but I think PG is more principled than that. Perhaps it's related to the fact that YC provides a lot more in terms of advice and guidance than cash, and then passes startups on to seed/series-A investors.

Why is Artificial Intelligence a market sector?. Seems as much useful as having a "PHP", "Java" or "<put technology name here>" market sector.

I totally understand your perspective, but I think people are interested in 'buying' artificial intelligence. It may be out of ignorance or maybe it's the way the market is describing 'help with implementing artificial intelligence.'

There is also algorithm/database based IP that is unique and worthy of separate purchase.

I disagree, if Tensor Flow was a market sector, that would be weird... but "Artificial Intelligence" as a term is the equivalent to "Web Development" as a term.

Aye, but do startups of today list "web dev" or "app dev" as their sector?

Yeah but unless you sell tooling your sector is not the tools you use, unless you are esplicitly chasing buzzwords.

I.e medium has a web development core, but that doesn't put it in the web development sector.

See eg. the AI effect and Tessler's Theorem: "AI is whatever hasn't been done yet."

https://en.wikipedia.org/wiki/AI_effect

There's this weird effect that's been observed wherever once an AI technique starts working, it becomes a field in its own right and ceases to be considered "AI". So for example, beam search and A* were once considered AI; now they're just algorithms that everyone should know. SVMs, decision trees, linear regression, and other statistical machine-learning techniques were once considered AI; now they form the basic knowledge for the field of data science. Computer vision, handwriting recognition, and OCR were once considered AI (indeed, they were some of the first applications of artificial neural networks); now they are fields in their own right. Ditto machine translation and voice recognition. Even information retrieval with its subfields of synonym recognition, language models, bigram recognition, NLP, named entity recognition, etc. were all considered AI.

That "AI" is considered the hot sector means that VCs don't have a clue what is coming next.

Yeah, if you look at the description of the companies, it's much more indicative of what the companies actually do. I suspect AI is just a buzzword they use to attract more attention. From the article, the AI startups are doing:

· Sales and marketing integration

· Enterprise search

· Multi-platform marketing

· Slackbot for sales teams

· Predictive analytics on customer lifecycle

I think the issue is that they're trying to signify how they're innovating rather than what sector the company is in.

A better taxonomy would indicate their sector and either be AI powered <sector> or just include their AI processes in the description.

The thing is though that AI opens lots and lots of new business opportunities and if these companies weren't doing nominally AI processes they wouldn't exist.

Agreed. Our core proposition is very much in the "AI" camp, but our market sector is undeniably "fashion".

It's cool to be included on this list with companies I hold in very high regard.

My company (Astro aka Twist Home), isn't one of those sexy AI / ML companies trying to make crazy futureworthy tech, we instead make super simple connected home experiences, and yet people find what we are doing interesting.

I can cite 100 other "lists" we've made this year, but this one seems at least researched versus the typical autogenerated list based on SEC Form D filings.

Any ideas as to why they would've excluded biotech? Would they have dominated the list? What about companies that combine some of these fields (biotech + AI)?

I had the exact thought in my head while reading the article!

and does biotech imply wet lab stuff only or is this including software? Does it include healthcare?

The fact that they referenced SoilIQ which was renamed Edyn nearly 3 years ago makes me question the robustness of this study.

We've asked the author to update the story.

I love the HN policy of de-editorializing headlines.

This one's editorialized to the point of meaninglessness, though.

I'd have preferred to see something like:

"Quid's list of 50 promising startups."

I'm not particularly confident in their methodology. I think particularly their first stage will suffer from a large number of false-negatives:

- "top venture capital firms" is an odd filter, especially given that industry specific investment funds are likely to have pretty good signal on good businesses in their industry.

- "companies that already show traction in their industry" isn't great considering that "AI" is considered an industry here, and startups being particularly "disruptive" might be difficult to classify.

- "companies in a sector that was an expanding market opportunity" is incredibly vague.

Instamotor (marketplace + fintech, San Francisco) is on there and we're hiring engineers :) jobs@instamotor.com

I'm not personally looking, but would be curious in a brief rundown of tech, business, and your example day-to-day.

Good luck!

happy to! email me at sy@instamotor.com

It'd be better if you did it here...

Emailed you... do you have your positions posted anywhere? I didnt see a /jobs page...

Thanks

This app is interesting. I do wonder how customers react to "verified" vs. certified pre-owned (CPO) from the dealer. Those dealership fees do give purchasers a certain level of comfort that I'm not sure a verification alone can disintermediate. It'll be interesting to see if you guys can keep the big autos from squashing you out of existence.

We're on the list. Not sure I'm happy or sad.

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

Our company is in this list.

Have very mixed feelings: - Happy for the PR, - Unhappy because it means that our marketing team hasn't done a fabulous job on driving awareness.

it means we could probably do a better job

I'm impressed by the geographical distribution. Yes there's a concentration in the SF Bay Area, but it's much less on a percentage basis than the distribution of startup finding as a whole.

I worked at OmadaHealth series A to C setting up the InfoSec program. It was fun! Looking forward to their continued success!

Just a single autonomous car startup.

Peak autonomy already over?

Maybe smart autos are being dominated by non-startup large players. Google, Apple, Uber, GM, etc.

Reply on news.ycombinator.com