On October 25th, Private Equity Wire announced that Grata won the Best Deal Origination Award 2023.
The winners were selected by a survey of over 35,000 dealmakers in the US.
First, I want to thank Private Equity Wire for recognizing the hard work and innovation that Grata has consistently strived for. This award serves as a testament to the relentless pursuit of excellence exhibited by every member of our team.
Nevin and I would also like to extend our gratitude to our customers, partners, and stakeholders. Your unwavering support and collaboration have been instrumental in our journey towards achieving this remarkable milestone. It’s important that we acknowledge the incredible talent within our organization. It is your passion, ingenuity, and commitment that have elevated the business to this level of success.
Looking back over the years since we started Grata, we’ve learned it takes many people to create a great product. We’ve also discovered the three major components that dealmakers are looking for in their sourcing platform: high-quality data, end-to-end workflows, and an AI-driven solution.
Highest Quality Data
Grata has invested heavily in our data quality, moving to a staggering 99% accuracy this year. Our client’s greatest pain point: limited and unreliable access to private company information.
Providing high quality data in our market is not an easy task - investors have a very high bar and middle market data across millions of companies is a long tail problem with little “low hanging fruit.”
At Grata, we’ve invested in proprietary data, synthesizing new sources to give us more accurate revenue/sizing estimates, contact info, classifications, and more.
And we’ve gone a step further. We're providing innovative information, like coining the “software-enabled” business model, to better help dealmakers find the right targets where traditional data constructs fall short.
End-to-End Workflows
This year, we also coined the term proactive business development (“PBD”). PBD is a multi-channel deal sourcing strategy implemented by top PE and corporate M&A teams. It’s a holistic view of private marketing investing, specifically focused on network expansion.
Grata is the only deal origination technology that supports the multiple channels of business development in one platform - from engaging directly with CEOs to finding ways to network to them via their lawyers, accountants, investors, and trade shows.
And on top of that, we built an integrated collaboration suite that helps teams manage their funnel, share notes, and capture their full sourcing workflow.
Integrated the Latest AI
The buzzword for tech companies in 2023 has been artificial intelligence. While some companies have rushed to incorporate AI into their platforms, here at Grata we recognized the power of AI years ago. Grata is built with AI at its core.
Here’s an example of what AI makes possible.
We know thematic dealmakers are looking at niche spaces with specific features. Asking questions like, How many car washes are in the US? Who has recurring revenue (subscription plans)? Or How many HVAC companies are in TX? Who has sticky government contracts (serves municipalities)?
We created an AI search that integrates deep industry research to find the right association between companies, even when their keywords don’t line up. AI powers our similar company search feature and gives us best-in-class results because other software still rely on the antiquated system of keywords or industry codes for company similarity.
What’s Next for Grata
We sat down with the Private Equity Wire team to discuss our perspective on some of the challenges and dynamics facing the industry and how Grata is approaching them.
Where do you see the most significant opportunities for growth in the coming year?
In 2022, Grata was a deal sourcing platform, for finding, researching, and engaging directly with private companies. In 2023 we built an all-in-one business development platform, helping our users network more effectively into deals - through investors, advisors, and events and conferences. In this next year, we will continue to expand our proprietary data and AI offerings but also help with more workflows like early due diligence.
Can you outline the most impactful drivers of client demand in the coming year?
Having a tech-supported deal sourcing function is considered table stakes now for PE firms, as the days of solely relying on auction processes are over. We also see a growth in the middle market, where LPs are funding more middle market strategies, more middle market and add-on deals are happening, and the returns are still outsized. To be more competitive among the influx of capital, firms are turning to Grata and rapidly adopting technology solutions.
What have been the biggest drivers of growth within your business?
Building AI workflows is certainly a growth lever. Over the past year, the rush to AI technology has been staggering. Some of our most universally loved features have been AI-powered for years. Today, the average customer expects AI to be more and more ingrained into the products they use. We’re meeting that demand with more conversational AI-powered experiences that will greatly improve efficiency in new ways.
What has been the most significant change you’ve observed in the private equity industry in the past 12 months?
Private markets have been surprisingly resilient since the global financial crisis, even through COVID and the most recent inflationary period. Industry dynamics changed when dealmaking slowed in the second half of 2022 and new LP commitments slowed. Despite these factors, there is still a record amount of dry powder in the market ($3tn!) and proven managers are still able to fundraise. Many investors have begun to explore add-on deals, especially in the middle market, which is highly fragmented.
What opportunities do you see emerging for private equity firms in the near future?
Private equity firms have a wealth of internal data at their fingertips, just from the conversations they have with executives and private investment processes they participate in. This gives them a better understanding of the economy over virtually every other asset manager, hedge fund, or other investment vehicle. With recent advancement in technology, we see a large opportunity for private equity firms to connect their internal knowledge (even starting with what’s in their CRM) to best-in-class proprietary data, like Grata, to see what others miss, ultimately finding better deals and generating higher returns.
