🦄 Unicorner Startup of the Week:

Harmonic

✍️ Notes from the Editors

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Crunchbase and Pitchbook have been around for decades. Harmonic is a newer contender, but with a number of unique features, it hopes to change how VCs and companies find their next hard-hitting startups.

We’ve had the chance to try Harmonic in sourcing some of our Unicorner startups, and within seconds of logging in, it’s clear the team is trying to build a more robust experience for startup discovery. We briefly explore some of those unique features and our overall thoughts in this week’s analysis.

- Ethan and Arek 🦄

The startup discovery engine to find your fund returners

Harmonic is a startup discovery engine for venture investors to find, analyze, and extract insights on startups and their founders. Harmonic’s “always-on” data engine is perpetually scouring the internet and legal filings for public information about startups and indexing it, turning the raw data into a searchable knowledge base with information on companies’ products, financials, founders, and more. Venture investors can discover startups using Harmonic’s web-based platform, a Chrome extension, or a developer-first API.

🔗 Check it out: harmonic.ai

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💰 Business Model

Harmonic primarily sells to venture capital investors looking to make data-driven decisions at their funds. It sells access to the data on its platform through a tiered subscription model that gives access to its web platform and Chrome extension. Firms can purchase the standard plan, or upgrade to the enterprise plan which has the ability to export data to CSV files. Harmonic also offers subscription plans for API access for customers looking to integrate Harmonic’s data with their data rooms, CRMs, and deal flow pipelines. Its most basic API offering is the enrichment plan, which gives information on queried companies, but users can opt for the full API plan to unlock discovery features or the bulk data plan for scale.

📈 Traction and Fundraising

• Raised a $23 million Series A in 2022, led by SoZo Ventures

• Amassed a database of 20 million+ companies and 160 million+ founders and investors

• Over 100 firms utilizing Harmonic, including Pear VC, New Enterprise Associates, Floodgate Fund, and Google Ventures

👫 Founders

• Max Ruderman, CEO: Previously COO @ Harmonic, Senior Software Engineer @ Google, Business @ Cornell, Economics @ Binghamton.

• Bryan Casey, ex-CEO: Previously Lecturer @ Stanford Law School. Currently Managing Partner @ Plural.

• Ajay Sohmshetty, ex-CTO: Previously ML Software Engineer @ Google, Masters in CS @ Stanford. Currently Founder @ Elmbase, Founder @ Stealth.

📖 Founder Story

Harmonic began as the “nights and weekends” side project of Ajay Sohmshetty and Bryan Casey while they were at Google and Stanford. At the time, Casey was also at a venture fund, and his legal background at Stanford helped him realize that VCs were missing a massive dataset for brand-new startups: legal filings. Casey and Sohmshetty then set out to build Harmonic as a discovery platform for startups, quickly hiring Max Ruderman, who left his software engineer position at Google to become the COO of Harmonic. Ruderman’s background at Google revolved around solving data problems and he had a clear line of sight on how to solve the issues Harmonic was tackling — his experiences with general search and discovery engines at Google empowered him to build similar technology focused on startups. Although Sohmshetty and Casey left the team to pursue new projects, Ruderman is now CEO at Harmonic and is leading the startup to revolutionize startup discovery.

💼 Opportunities

• Go-To-Market Account Account Manager

• Go-To-Market Account Executive

• Sales Development Rep

• Senior Software Engineer, Evaluation

• Senior Software Engineer, Tracking

• Staff Software Engineer, Discovery

• Staff AI/ML Engineer, Discovery

🔮 Our Analysis

For venture capitalists, making investments in startups has lots of pain points: it's hard to source early-stage companies due to their small presence, and data on these companies is hard to come by, making the diligence process harder. Although Harmonic directly addresses these problems by making startup discovery and data extraction a frictionless process, the broader problem that Harmonic aims to solve is capital inefficiency. Currently, VCs have significant payroll costs, such as scouts and analysts that source and extract insights on the startups they’re interested in. In these high interest-rate environments where venture dollars are expensive, cutting those costs is essential, and Harmonic positions itself to do that by making sourcing and analyst teams infinitely more efficient. Furthermore, most investors only have access to deals from within their networks, meaning their ability to allocate capital is inefficient. However, Harmonic allows investors far more visibility than organic deal flow— through the discovery and search engine that Harmonic provides, investors can access deal flow outside of their networks, and query for companies with specific characteristics, metrics, and sectors that make sense for their fund.

Harmonic’s ability to aggregate vast amounts of startup data across sources is impressive, but its value proposition revolves around its ability to index this information, making it searchable in a cohesive knowledge graph. This capability revolves around complex searching software, which allows Harmonic to offer an innovative business model. Although its underlying value is in its data, Harmonic operates with a SaaS model through its discovery engine rather than acting as a pure-play data vendor. By selling software rather than raw data, Hamonic is able to operate with a subscription, keeping customers long-term with predictable revenue. Harmonic’s value proposition is set to become even stronger, as it’s heavily reliant on AI, and as that technology continues to improve, the quality of searching on Harmonic’s platform will continue to improve.

Despite these bull cases, Harmonic is currently operating in a bounded market: the total addressable market of VCs is large, but likely not unicorn-worthy. Addressing this, Harmonic is positioning itself as “the single source of truth” for startups, by first solving the capital inefficiency problems with VCs, then hoping to expand into solving the other problems the venture world faces. The grassroots of these broader dreams are visible even in their current product: lots of non-VCs such as Brex, Google for Startups, and Nvidia all use Harmonic to discover early-stage startups to sell to. Due to high enterprise switching costs, these businesses rely on acquiring startups as customers and keeping them on the platform as they scale— a model that Harmonic perfectly supports through its ability to source and identify likely high-margin customers. As the Harmonic team looks to the future, startup discovery for VCs is just the beginning.

📚 Further reading

• Harmonic Helps Investors Query the Startup Searches of Their Wildest Dreams [TechCrunch]

• How to Establish a Data Strategy for Your Fund [Harmonic]

• Ridge Ventures Takes a Data Drive Approach to Identify Startups at Their Earliest Stages [Harmonic]

Written by Rohan Desai

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