Posted by: Catherine Holahan on August 7, 2008
My colleague Jay Yarow wrote this post about YouNoodle.
On Tuesday, Weplay, a social networking start-up aimed at young athletes, announced that it closed an $8.6 million round of series B financing. Deep Fork Capital led the round, with Derek Jeter, Peyton Manning and LeBron James also contributing.
What do these jocks know about web 2.0? Probably, very little. Will they make their money back from this investment? Bob Goodson, CEO and co-founder of YouNoodle, thinks he knows.
YouNoodle is a social networking site for entrepreneurs and start-ups. The site launched in February and starting Thursday, it will make its Startup Predictor engine public. The predictor uses an algorithm that crunches start-up data to determine the potential success or failure of a company. It’s backed by a few investors with successful track records who never needed an algorithm to spot a good idea—Max Levchin of PayPal, Slide and Yelp fame, as well as Peter Thiel, an early investor in Facebook, LinkedIn to name a few as well as a managing partner in the Founders Fund.
“There was $67 billion invested in the U.S. alone last year in start-ups from VCs and angels,” says Goodson, “Yet, there is no standardized scoring system to help make the decision about how to invest.” He hopes YouNoodle will aid investors in deciding how to spread their money, as well as people considering working for new start-ups and even journalists trying to decide what companies to report on.
If the Startup Predictor had been around earlier this week, Peyton Manning could have logged onto YouNoodle’s home page and filled in detailed information to get a predicted valuation for Weplay. A few of the necessary details: what valuation the founding team was aiming for, when the company was incorporated, if there are patents in development, as well as the names of the founders. Some of the information is difficult to attain without doing some serious research. YouNoodle asks the salary of the CEO, his or her email, age, degrees and when they first started to attend university. YouNoodle gets a tremendous database of information about start-ups companies. With that information, YouNoodle may end up with a valuable asset that it could use in the long run to sell to entrepreneurs and Venture Capitalists. Currently, the site is all free.
In addition to the valuation, Manning would get a YouNoodle score as well as recommendations of people on the YouNoodle site that would be able to assist in developing the Weplay website. I took over for Peyton, and guessed on some information like amount of employees, CEO’s current salary, his salary at his last job, etc. and I got a valuation of $37 million for the company in three years as well as a 611 YouNoodle score.
“All other industries use credit ratings like S&P and Moodys,” says Goodson, who hopes the YouNoodle score, which is a number between 1 and 1000, will one day be seen in a similar light. “It’s not supposed to replace the way a [Venture Capitalist] makes a decision, but a high YouNoodle score should supplement people’s decisions.”
While many Venture Capitalists would probably balk at the idea of using a start-up with a goofy name to make decisions, many General Managers in baseball also laughed at the idea of using statistics to make player choices. Then Moneyball came out and the idea didn’t seem so silly.
What does the Startup Predictor say about YouNoodle? In September of 2010, the company ought to be worth $98 million. It has a YouNoodle score of 496. But, will that score mean anything in two years?
What do you think, would you trust YouNoodle to assist you in deciding where to work or invest?