Bay Area Dominates Wall Street Journal List of Top 50 Startups
No. 1 on the list is Castlight Health, based in San Francisco, and No. 3 is Xactly Corp., from San Jose. Castlight makes “web-based software that gives employees personalized views of medical benefits and treatment costs.” Xactly makes “web-based software for managing sales compensation.”
Criteria for eligibility on the list:
To be eligible for the ranking—compiled by research firm VentureSource, a unit of Wall Street Journal owner News Corp.—companies must have received an equity round of financing in the past three years and be valued at less than $1 billion, as the aim is to identify lesser-known contenders. That excludes a number of prominent companies, including Facebook, Twitter and Groupon Inc. Some 5,743 candidates were considered.
Criteria used to rank the companies:
• More money is better: A firm with more capital to deploy than its competitors will have an advantage.
• Growth is good: Companies with higher valuations for their equity are more successful than smaller ones.
• Intangibles abound: Company success can’t be reduced to an equation.
All of that is explained in this Journal video.
So how accurate is this list as a predictor of the next Google, as opposed to the next Pets.com? Well, since this is only the second year, hard to say. But last year’s crop of companies included Zynga, the San Francisco-based social gaming company that is now valued at anywhere from 5 to 10 billion (depending on how many Facebook Farmville updates get sent out on any given day, I guess), and HuffingtonPost.com, which was sold to AOL last month for $315 million.