When researching competitor and supplier landscapes, startup discovery is an important component to include. This is generally not as challenging as one would think. Founders are, on the most part, very willing and eager to talk about their companies and the unique propositions they bring to market. Founders promote their companies in a variety of ways such as participating in podcast interviews, industry events, trade shows, tech competitions, pitch events, and through local media, such as regional news publications, and local workforce and chamber organizations. There is another type of startup that strategizes with a totally different approach: the stealth startup. The stealth startup purposely keeps itself quiet for a number of reasons, with the main one being to protect its intellectual property or idea from getting discovered or stolen by competitors. Another reason for a startup to be in stealth mode is to be able to wait to ensure the technology or service offering has been developed thoroughly so it is “bug free” when introduced to the market. This avoids negative press or messaging that could thwart the initial push into public view. Investors have differing (some strong) opinions on the benefits and weaknesses of this strategy. The biggest argument against a startup operating in stealth mode is that it does not allow the market and potential customers to provide valuable feedback about what they are actually looking for and needing in an offering. A natural part of becoming successful is by learning to be flexible and willing to ditch initial features and concepts in favor of new ones that make the offering more attractive to potential customers. Basically, by being in stealth mode makes establishing product-market fit initiatives more difficult.
There are many instances of both failures and successes with startups developing in stealth. As an example of a success story, Snowflake spent its first two years in stealth mode and emerged in 2014 at the same time it announced a Series B round of financing led by Redpoint. Examples of supply chain, logistics, and procurement-related startups that emerged from stealth within the last year include load board/digital trucking platform provider, TruckSmarter; corporate travel as a service startup, Spotnana; robotic nano-fulfillment center provider, 1MRobotics; SaaS purchasing platform provider, Vertice; and middle-mile delivery solution provider, Warp.
Finding information on startups in stealth mode is extremely challenging. The best approach is to be as creative as possible and to use a variety of tools and approaches. Here are a few ideas to help.
VC Funding and Startup Databases and Platforms – These types of resources are designed specifically for startup research and it is possible to find companies self-labeled or named as a startup in stealth mode. For example, in Crunchbase, even in free mode, you can do a Companies search and use “stealth mode” in the Description keywords filter bar and select an industry in the Industry dropdown filter bar (do a search to see where certain terms land, for example Supply Chain and Procurement are under Transportation category). A list appears and for each company you can get, at a minimum, funding amounts, founders/employees and other information. For overall understanding of the various platforms and what they offer you can read this summary article, which links to the full article, by Andre Retterath, with the following databases/platform benchmarked: Angellist, CB-Insights, Crunchbase, Dealroom, PitchBook, Preqin, Tracxn and VentureSource (which got acquired by CB Insights). Another article to read that covers data accuracy with databases that track venture capital deals is by Sarah McBride and Priya Anand via Bloomberg. Beauhurst, a company that tracks high-growth companies, covers unannounced investment deals in the UK by monitoring all SH01s (forms that companies submit when they wish to issue new shares) filed to Companies House. Unannounced transactions, they state, “are an integral part to understanding the beginnings and continued growth of some of the largest companies in the UK.” As of July 2021, they have tracked over 7,300 companies on the platform that have raised equity funding and never announced it to the public.
Concerning Companies House, which is the the United Kingdom’s registrar of companies, you might run across a company that is dormant, meaning it’s not doing business and doesn’t have income. This could signal a company is taking their time in development and is keeping quiet.
Investors/VCs Approach – Private investors and venture capitalists (VCs) provide funding for stealth mode startups, just like public-facing startups and you can search the portfolios of VCs. Investigate which VCs specialize in the specific sector of interest. This is easy to accomplish with simple Google searching and through access to reports provided by startup data platform providers. This type of report data can be helpful. For example, CB Insights data showed, in 2020, VCs that specialize in healthcare and software startups, are the “stealthiest.” Also NEA and Lightspeed are among the stealthiest VCs with others that include Versant Ventures, The Vertical Group, GGV Capital, Khosla Ventures, and Third Rock Ventures. A commonly known sign that a company is operating in stealth is when they are listed in a VC portfolio but otherwise there is very little about them, including a sparse website. In a twist to this thinking, venture firm Atomic, a company that founds and funds companies, in an interview with Techcrunch states they have founded many more companies than are listed on their website. They “have to keep [their] companies stealth because otherwise people will just copy them early on.”
Indirect Route Through Founder and Innovation Searching – You can glean information by looking into the CEO and or founder/co-founders. In LinkedIn, a founder will list the company as something like “Startup in Stealth Mode.” You can do a search (via LinkedIn or Google site search) including the terms founder stealth and the industry/sector of interest. From there, investigate the CEO/founder to determine past activities and current events and activities they are engaging in. A founder, even in stealth mode, still needs to consider marketing and will start communicating out and building a network (just like public facing) in the industry/sector being targeted. Innovative companies can be identified by their patent-seeking activity through resources provided by startup data platform providers, patent data providers like Derwent Innovation, and open access tools such as United States Patent and Trademark Office’s Patent Public Search tool, Espacenet (global patent database), and Google Patents.