SBIR-STTR Award

This Small Business Innovation Research (SBIR) Phase I project addresses the challenge of offering reliable, actionable and real-time intelligence about private companies - a challenge acutely felt by financial institutions, investors, service providers, researchers and entrepreneurs. The company plans to develop a platform that will (1) collect information on private companies from millions of relevant sources; then (2) extract and structure this information and finally (3) algorithmically deliver an ongoing quantitative measure of company creditworthiness and health - thus developing a Private Company Strength & Sentiment Score. The Phase I research is comprised of three stages: (1) Set Up, which includes the identification of Strength and Sentiment Indicators (SSIs) that drive the score as well as identification of relevant data sources; (2) Data & Technology, which includes optimizing existing technology for collection of SSI data as well as collecting real financial and operating private company data for a test sample; and (3) Analysis, which includes preparing the data set, running statistical analyses and creating SSI scores. This final step of Phase I entails examining correlations between outputs and the empirical data collected for private companies so that predictive value can be assessed. The primary commercial benefit of this effort will be the increased availability of competitively priced credit to US small businesses. If successful, the effort will reduce the information asymmetry surrounding private company information and thus allow financial institutions to better estimate the initial and ongoing risk associated with private small businesses who may be seeking credit. Broader societal impacts resulting from increased credit availability to small businesses include increased "economic growth, employment and payrolls at businesses of all sizes" according to the SBA Office of Advocacy. In addition to benefitting institutional lending, the effort has the potential to offer significant upside to those businesses providing trade credit or supplier financing of purchases as well as to the equity investment community, e.g., venture capital, private equity. Longer-term, the data collected to create and track companies' scores represents a rich repository of entrepreneurial & private company data that can be leveraged to create data-driven offerings that assist entrepreneurs, academics, researchers and public policy professionals their attempt to understand and support our nation's entrepreneurial ecosystem

This Small Business Innovation Research (SBIR) Phase II project will develop an software system directed at financial institutions (lenders and investors) that will provide them with actionable, realtime intelligence into the health of private companies. The technology being developed will scan and parse millions of structured, semi-structured and unstructured information sources searching for signals of a private company's health. Then, based on context, it will algorithmically process, categorize and assess the sentiment and strength of these disparate signals to offer a comprehensive, coherent and real-time view of a private company's health, its likely financing needs and best fit financing solutions from a financial institution?s product portfolio. Using the company's line of products, financial institutions will be able to look at private companies in a fundamentally different, smarter, more scalable and data-driven way that empowers them to efficiently and intelligently make critical financing and capital allocation decisions. Specifically, they will have the potential to able to identify the right private companies in real-time and will be armed with intelligence they can use to offer them appropriate financing solutions. The system's ability to process a diversity of structured, semi-structured and unstructured information sources and programmatically derive measures of company health would have profound positive effects on the precision, rigor and scalability of institutional lending and investment into private companies. Today, the private company financing market is built on highly imprecise and imperfect heuristics that result in high business loan default rates, or at its worst, bank failures as occurred in 2009. The downstream impact of this is that small businesses do not get the financing they need as evidenced in 2009 when, according to the Federal Reserve, only 40% of private small businesses that sought bank financing actually received the funding they needed. Per the Small Business Administration, businesses with fewer than 500 employees account for more than half the nation's employment and nearly half of GDP. As a result, it is critical that healthy private companies which are an economic catalyst have access to financing. Unfortunately, without credible, actionable, scalable and real-time information which distinguishes between healthy and unhealthy private businesses, financial institutions remain at an informational disadvantage. This increases their risk, which in turn hinders growing, healthy private companies from receiving the financing they need. If successfully deployed, the technology being supported by this proposal has the potential to make a significant impact in the marketplace