Fintech: Is DueDil a Bloomberg for the private markets?

By:
Peter Lee
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Having moved far beyond start-up status, the data provider is looking to help transform the way that companies interact

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Founded just four years ago, DueDil has grown quickly to become the biggest source of information in Britain about private companies. It extracts, aggregates, sifts and manages data from open public sources, primarily Companies House and Registry Trust, but also from select third parties such as credit ratings agencies, from trawling private companies’ own websites and increasingly from those companies’ own self-generated content.

It has become almost a standard reference tool. In the run up to the UK election in May, immigration may well be a big issue as Ukip seeks the votes of the discontented. Expect to see articles sourcing DueDil in any discussion of the contribution of immigrants to new-company formation, job creation and the like.

DueDil follows the so-called 'fremium' business model, allowing users a basic level of free access, then charging higher rates for companies that take larger amounts of data and use its data presentation tools regularly. It’s familiar from success stories such as LinkedIn, which 10 or more years ago engaged so-called 'super users', such as big companies’ HR departments and recruitment businesses that provided most of the revenue and a focus for refinement of the offering.

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 Creating context is key to what we’re doing. By linking data on related entities we can surface the relationships that exist between them

Justin Fitzpatrick, DueDil

Users of DueDil range from large public to small private companies seeking potential buyers of their products and services that want to identify and do light due diligence on, for example, businesses of a certain age and revenue level in a 30-mile radius of the user’s own location that might buy the searching company’s web development product, its office cleaning services or whatever.

Justin Fitzpatrick, co-founder, chief operating officer and chief financial officer of DueDil, says: “Our aim is to integrate DueDil data across our customers’ workflow. Around 99% of all companies are private, and they account for roughly half of GDP, but information on these businesses is still fragmented and expensive to access. We’re making this information much more intuitive to use and easily accessible for even small and medium-sized businesses. By lowering these barriers we can become core to how they run their business; from how they prospect new customers right through to verifying partners and monitoring ongoing credit exposure.”

DueDil plays in that fascinating area, familiar to so many in financial markets, where accumulation of information steps into interrogating the data and gathering useful knowledge.

“Behind DueDil’s user interface is a large and complex technology effort to extract, clean and match information,” says Fitzpatrick. “Creating context is key to what we’re doing. By linking data on related entities we can surface the relationships that exist between them. That provides a fundamentally different view that you’re not going to get just by aggregating data on a single entity in isolation. For entity verification, for instance, you can use DueDil to pull a company’s incorporation documents as you would on Companies House, but you can also see all of the company’s directors and the other directorships those people hold. If those directors are associated with many failed or successful businesses, that’s going to change how you see things.”

Competitors include the traditional credit ratings agencies – the likes of Dun & Bradstreet and Experian that have size and scale but the disadvantage of legacy and technology – and next generation data platforms being set up in Silicon Valley and New York.

Funding

DueDil employs 50 people, mostly engineers and data scientists. It has raised several rounds of funding: a $5 million A-round led by Notion Capital in 2012 when it had 40,000 users; while Oak Investment lead a $17 million series-B round this time last year. It now has 1 million users. Certain institutional investors have maintained exposure through each subsequent round.

The tech spend is heavy. “We think we have a great opportunity to build a world-leading solution for private-company information,” says Fitzpatrick. “The exciting thing about software as a service is the potential to quickly gain massive scale. When you also consider that data tends to create liquidity that expands markets, that’s a really powerful combination. We saw it with Bloomberg starting in the 1980s, Markit in the early 2000s, and we’re seeing it again with private-company information now. DueDil can have the same transformative effect on private markets as those other companies had on public markets.”

Fitzpatrick and his co-founder Damian Kimmelman are American. What made them launch in the UK? “The UK has a great foundation due to initiatives around open data, and Companies House has been a very engaged partner. There’s a lot of other data out there as well, but it’s too difficult or expensive to access for most companies. In the US, official sources are much more challenging to access, and many private US companies still regard provision of data as a burden. Organizations such as the Data Transparency Coalition are doing great work trying to shift these attitudes. However, it’s a slow process that can be easily setback by policymakers who don’t understand the economic multiplier effect transparency can create. There’s a big cultural difference in the UK; many people here are already attuned to the wider benefits of greater transparency.”

It sounds like the UK is the testing ground for what might become a much bigger and more international business, although sceptics say DueDil will struggle to expand, as few countries have anything like the data requirements that private entities have to provide in the UK.

 “Since launching in the UK and Ireland we’ve learned a lot about how to handle complex and messy data from multiple sources,” says Fitzpatrick. “Some sources still try and send us data on CDs. We thought it would be easier to learn these lessons working in a data-rich environment like the UK, so we could then transfer these lessons and models to other geographies.”

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He adds: “We’ve already started to see the benefits of this strategy, and now have data from 18 European countries. That’s a meaningful starting point for our next stage of growth.”

Critical elements

Fitzpatrick is enthusiastic about London’s position as a global centre for financial technology. “One of the reasons I was so excited to help launch [industry body] Innovate Finance is that the UK, and London in particular, has a special opportunity to capitalize on its position as the leading fintech hub in the world. Silicon Valley has tons of tech, but it doesn’t have the fin. New York is the financial capital of the largest single domestic market, but London has fantastic links to other financial capitals and is a major centre in its own right. London has other critical elements, especially in regards to its talent. Here you have people with deep domain expertise in financial services, access to strong engineers and world-class creatives.

“It’s important that the government continues to develop and welcome this talent, wherever it might come from. This highlights the UK’s other major advantage: the ability to coordinate on policy and create the right regulatory environment. In the US you have the added complexity of needing to engage at the local, state and federal levels. With the proper support the UK can demonstrate to how to re-build financial services in a way that benefits society as a whole. That’s what motivates the people involved in Innovate Finance.”