Tracxn Technologies

Tracking for growth

Providing data for deal sourcing, identifying M&A targets, deal diligence, analysis and following emerging themes

Tracxn Technologies (Tracxn) is one among the leading market intelligence providers for private company data across sectors and geographies. It has one of the largest coverages of private companies in emerging technology sectors including IoT, artificial intelligence, virtual reality, robotics, blockchain and electric vehicles (Source: F&S Report).

Tracxn has an asset light business model and operate a Software as a Service (SaaS)-based platform. Tracxn has scanned over 662 million web domains and profiled over 1.84 million entities across 2,003 feeds categorized across industries, sectors, sub-sectors, geographies, affiliations, and networks globally, as of June 30, 2022. The company's platform has 3,271users across 1,139 customer accounts in over 58 countries, as of June 30, 2022.

Tracxn offers customers private company data for deal sourcing, identifying M&A targets, deal diligence, analysis and tracking emerging themes across industries and markets, among other uses, through its subscription-based platform, Tracxn. The company launched its platform in FY2015 with a particular focus on the global emerging technology sector, providing users with detailed profiles of companies including detailed information of funding rounds and acquisition related information, taxonomy and market maps, global competitor benchmarking, financial information, valuation and capitalization tables, employee count, investor profiles, competitor mapping, information about founders, key team and board member, company and sector specific reports and news events. The company has since then expanded its coverage to include 18 data modules and over 1.84 million entities, as of June 30, 2022.

The company's extensive global database of entities coupled with customized solutions and features allows customers to source and track companies across sectors and geographies to address their requirements. The company is among the few private market data service provider to have a proprietary taxonomy for technology sector companies and prepare market maps.

The company's platform uses an in-house developed algorithm based on a combination of technology and human analysts, to process vast amounts of data, create profiles and provide market intelligence on private market companies. The company's human-in-the-loop plays a strategic role, focusing on quality assurance and addressing data and intelligence gaps that technology alone cannot solve.

The company believes that the combination of technology coupled with human-in-the loop has helped it to maintain a high degree of accuracy and effectiveness while exponentially expanding its global coverage. The company's platform includes multiple work-flow tools such as a customizable customer relationship management (CRM) tool integrated with its database allowing for better deal management. The platform allows personalization for enhanced tracking and data driven insights. Its capabilities include sourcing dashboards both locally and globally, portfolio tracking, data intelligence and data analytics.

Over the years, the company has developed a systematic process of sourcing data including technology-based data extraction and instantaneous data upload through Application Programming Interface (APIs). The company also relies on information from websites, news reports, press releases, social media, and events to identify and track private market company information. As part of its sourcing process, it also obtains financial and non-financial information through automation from regulatory filings globally. The company has an added layer of language translation that is used for sourcing information from countries where English is not the primary language.

Clientele includes VCs, PE Funds, Merger & Acquisition (M&A), and Innovation teams of Fortune 500 companies and Investment Banks which are using Tracxn data for daily deal sourcing, identifying M&A targets, deal diligence and tracking emerging themes across industries and markets. Tracxn platform is also used by various Governments, accelerators and incubators, and universities for tracking innovative companies and sectors. The company's customer accounts have increased at a CAGR of 30.42%, from 642 customer accounts, as of March 31, 2020, to 1092 customer accounts, as of March 31, 2022, and 1,139 customer accounts as of June 30, 2022. The company has maintained long standing relationships with its customers and as of June 30 31, 2022, 23.44% or 267 active customer accounts have been associated with the company for over three years (with a maximum gap of three months between subscriptions).

The company is promoted by Ms Neha Singh and Mr Abhishek Goyal.

Ms Neha Singh holds an MTech from IIT Bombay and a MBA from Stanford Graduate School of Business. Post pursing her graduation she worked as an associate in Boston Consulting group and as an investment analyst in Sequoia Capital.

Mr Abhishek Goyal has a B Tech (Computer Science) from IIT Kanpur. He has worked in various positions in companies including yahoo, Andale, Amazon and Accel Partners. He also founded UrbanTouch.com before Tracxn Technologies.

Operations have been supported by investments from angel investors including Ratan Tata, the NRJN Family Trust, Neeraj Arora, Sachin Bansal, Binny Bansal, Amit Ranjan, Girish Mathrubootham, Anand Rajaraman, Amit Singhal and Ashish Gupta. The company  received investments from Elevation Capital, Accel Partners, Sequoia Capital, Prime Venture Partners and KB Investments.

Object of the offer

The offer comprises an offer for sale by selling shareholders Ms Neha Singh of up to 76,62,655 equity shares, aggregating Rs 61.3 crore, at upper price band, Mr Abhishek Goyal up to 76,62,655 equity shares, aggregating Rs 61.3 crore, at upper price band, Elevation Capital up to 1,09,80,885 equity shares, aggregating Rs 87.85 crore, at upper price band,Accel India IV(Mauritius) Limited up to 40,17,506 equity shares, aggregating Rs 32.14 crore, at upper price band, SCI Investments V up to 21,81,692 equity shares, aggregating Rs 17.45 crore, at upper price band, Binny Bansal up to 12,63,096 equity shares, aggregating Rs 10.1 crore, at upper price band, Sachin Bansal up to 12,63,096 equity shares, aggregating Rs 10.1 crore, at upper price band and others up to 36,40,623 equity shares, aggregating Rs 29.12 crore, at upper price band.

Ms Neha Singh pre-issue shareholding was 25.5%, which shall decrease to 17.8% at the upper price band of Rs 80.

Mr Abhishek Goyal pre-issue shareholding was 25.5%, which shall decrease to 17.8% at the upper price band of Rs 80.

Strengths:

The company is one among the leading private market intelligence providers for private company data globally and rank among the top five players globally in terms of number of companies profiled that offer private market data across sectors and geographies. Its extensive global database coupled with customized solutions and features allows customers to source and track companies across sectors and geographies to address their requirements. Its platform offers detailed coverage of company information that includes company profiles, funding rounds, capitalization tables, financials and valuation, news, team size and trends, competition mapping and information about founders.

The company is focused on increasing the number of entities reviewed and profiled by it. The number of entities the company profiled on its platform has increased at a CAGR of 37.00%, from over 937,698 as of March 31, 2020, to over 1.76 million, as of March 31, 2022. As of June 30, 2022, the number of entities it profiled on its platform was over 1.84 million. In FY 2022 and in the three months ended June 30, 2022, information of approximately an average of 1,652 and 1,275 new entities, respectively, across various sectors was added to its platform daily. The company is also focused on expanding the scope of information of entities profiled by the company.

The company has a diverse base of 1139 customer accounts present in over 58 countries, as of June 30, 2022. Its customer account base has increased by 450 customer accounts at a CAGR of 30.42% in the last three Fiscals, from 642customer accounts as of March 31, 2020, to 1,092customer accounts as of March 31, 2022, and further to 1,139 customer accounts, as of June 30, 2022, due to marketing efforts and referrals by existing customers. Some of these customer accounts are for customers that include 'Fortune 500' companies and/or their affiliates such as Unilever Industries Private Limited. Its global customer base helps the company limit its dependency on a specific customer, industry or geography thereby reducing financial and concentration risk.

Scalable and secure technology platform conceptualized and developed in-house. The company's platform, based on a combination of technology and human analysts, can process vast amounts of data. The company conceptualized and developed its platform in-house, and it is designed to be scalable and reliable providing the company flexibility to launch new features as per its internal product road map. The platform has been designed and built primarily using new-age technologies, for hosting on cloud infrastructure. Tracxn is a data and market intelligence platform with over a million curated entity profiles mapped to over 49,000 different business models, searchable in near real-time through a set of search tools built in-house using an open search engine and analytics solution. In addition, the company has built a range of business and workflow tools like an inbuilt CRM tool, custom dashboard builder, tools for sourcing, tracking companies, portfolio tracking, API support, browser extensions, ability to save searches and provide alerts and export tools. The company also offers enterprise grade support for customer queries with personalized support over chat, email, and instant messaging applications.

Most of the workforce of Tracxn operates out of India, the company, by default has a cost advantage over its competitors based out of countries like North America and Europe. Remuneration to services profession in India is lower than that of North America and hence this is highly advantageous for private data provider companies like Tracxn.Further, the company's business is technology driven, asset light and scalable, as such enjoys high operating leverage. In the last two years, the company’s revenue increased by 70% while cost increased by 9%.

Weakness

Failure in attracting new clients, maintaining existing clients or expanding users within existing customer accounts will have an impact on the company's revenue and profitability.

Revenue from operations is gained from subscription of the platform by customers. Hence, if the customers do not renew the subscriptions, it will hurt the revenues of the company.

Interruptions or performance problems associated with the platform will have an adverse impact on the company's business and financial condition.

The market for private market intelligence is competitive, rapidly evolving, and fragmented as such the company face competition from and could lose market share to its competitors, which could adversely affect its business.

Unable to obtain and maintain accurate, comprehensive, or reliable data, could experience reduced demand for the platform and services of the company.

The company's success to an extent depends on its ability to expand use of platform by customers globally and accordingly, its business is susceptible to risks associated with international operations.

On an average 70% of the revenues were earned by overseas market in the last 3 years as such margins are susceptible to fluctuation in foreign exchange rates.

Use of open-source software could subject the company to face claims challenging the ownership of open-source software and compliance with open-source license terms.

In FYs 2020, 2021 and 2022 and in the three months ended June 30, 2021, the company had restated loss for the year / period of Rs 54.03 crore, Rs 5.35 crore, Rs 4.83 crore and Rs 0.72 crore, respectively. This was primarily on account of fair value loss on compulsorily convertible preference shares measured at fair value in FY 2020 and substantial expenses that the company incurred to grow its platform and overall operations. However, the company had restated profit for the period of Rs 0.83 crore in the three months ended June 30, 2022, any losses in future periods could adversely affect the operations and financial conditions of the company.

Valuation

For Q1FY2023,sales were up by 22.9% YoY to Rs 18.4 crore. Operating Profit for Q1FY2023 stood at Rs 0.19 crore as against loss of Rs 0.62 crore in Q1FY2022. PBT after exceptional items stood at Rs 0.84 crore against loss before tax of Rs 0.72 crore. Net Profit for Q1FY2023 stood at Rs 0.84 cr as against Net loss of Rs 0.72 cr in Q1FY2022. The company incurred exceptional loss of Rs 0.53 crore in Q1FY2022.

For FY 2022, consolidated sales were up by 44.9% to Rs 63.45 crore. The growth in revenues was led by healthy growth in customer accounts from 855 as on March 31, 2021, to 1092 customer accounts as on March 31, 2022. Loss from operations declined to Rs 1.92 crore in FY2022 as against loss of Rs 17.06 crore in FY2021. Other income was lower by 85.8% to Rs 1.7 crore.  Loss before tax was lower and stood at Rs 4.85 crore as against loss before tax of Rs 5.35 crore in FY2021. Net loss stood at 4.85 crore in FY2022 as against net loss of Rs 5.35 crore in FY2021. The company incurred exceptional loss of Rs 4.49 crore in FY2022 related to IPO issue related expenses.

At the higher price band of Rs 80, the offer is made at around 11.7times EV/TTM Sales.

The company does not have any listed peers.