Here’s what VCs think of startup rating tool Oddup, which just raised $6m

Core team members from L-R: Jackie Lam (COO), James Giancotti (CEO & co-founder), and Brian Chan (chief research officer). Photo credit: Oddup.

Hong Kong-based Oddup, a rating tool that tells you whether a startup is likely to succeed or not, has raised a US$6 million series A round, bringing its total funding to date to US$7 million.

The round was led by the Times Group, India’s largest media conglomerate – which is also an investor of Flipkart and Snapdeal. Existing investors 500 Startups and Click Ventures as well as new investors Silicon Valley’s Moneta Ventures and White Capital participated.

Made up of a team formerly from huge investment banks like Goldman Sachs, Oddup rates startups with a score of zero to 100, with 100 indicating the least risk. The criteria include product, location, competitors, team, and potential growth, among others. For further guidance, it rates startups as a buy, sell, or hold – with analysis, reports, as well as expected future valuation (here’s the company’s full profile).

Oddup says it provides investors – from angels to venture capitalists and private equity firms – data that is otherwise difficult and time-consuming to acquire.

The company will use the financing to expand across Asia, particularly India.

“Oddup is such a fast-growing global startup that we decided to back and lead their way into India. We look forward to working towards the success of Oddup in setting up an innovative startup rating system for India,” said Sivakumar Sundaram, CEO of Brand Capital, the investment arm of the Times Group.

‘Not a major contributor’ to decision-making

The question becomes: how useful are tools such as Oddup for investors?

We asked some active VCs in the region for their take.

Jenny Lee, managing partner at GGV Capital, said they’re not using such tools since “startups fail or succeed because of many factors which sometimes cannot be quantified or may not be public.”

“Startups are also never static and will evolve over time in their environment, so a company rated low may become highly successful overnight because of a new supportive regulation or because the investor brings along the ‘x factor’ critical for success,” she added.

Yet Jenny said they may consider taking a look at ratings and reports to double-check against their own due diligence.

Golden Gate Ventures founding partner Vinnie Lauria pointed out that Oddup’s website “looks great but I don’t want one score to tell me if a startup is good or not; that was the problem with the Mattermark score.” He was referring to the Silicon Valley-based data platform that also scores startups on their growth potential.

As an early stage investor, Vinnie isn’t looking to minimize his risk, but increase it. “So a startup with a low risk and high score doesn’t excite me. I want high risk, which means the potential for zero outcome is also high – but that’s okay.”

What Oddup’s own investors think