PitchBook is a leading provider of data on the private capital markets, offering comprehensive data on venture capital, private equity and M&A transactions across industries and geographies. But how accurate and reliable is PitchBook’s data actually? In this comprehensive guide, we will examine the accuracy of PitchBook data across key metrics.
Coverage and Comprehensiveness
One of the most important aspects of data accuracy is coverage – how comprehensive is the dataset? On this front, PitchBook offers exceptionally broad coverage of the private markets. According to PitchBook, their database includes detailed information on over 5 million private companies, 780,000 funds, and 1.3 million investors. This data is compiled from a variety of public and proprietary sources, as well as direct contributions from industry contacts.
In terms of private company data, PitchBook claims to capture details on over 750,000 private companies globally. Coverage is particularly strong in North America, where data on around 500,000 companies is provided. Europe and Asia Pacific are also well represented. Importantly, PitchBook’s coverage spans all stages – from early-stage startups to large, mature private companies.
On the investor side, PitchBook provides profiles on 230,000 angel groups and investors, 450,000 venture capital and private equity firms, and 620,000 limited partners. This offers extensive visibility into the networks and relationships connecting the private markets.
When it comes to deals, PitchBook says it captures details on 1.5 million deals per year across angel, seed, and early through late-stage venture capital, growth equity, buyouts, recapitalizations, private debt, and private investments in public equity. Granular data is provided on deal terms, participants, and trends over time.
Based on these coverage statistics, PitchBook offers exceptional breadth and depth of data within the private markets – superior to most competing data providers. However, coverage is still unlikely to be fully comprehensive, as some deals inevitably occur “under the radar”. But PitchBook’s data should cover 90%+ of global private market activity.
Data Accuracy
Beyond coverage, the accuracy of PitchBook’s data is also crucial to consider. Unfortunately, limited transparency is provided on PitchBook’s processes for ensuring data quality. However, some insights can be gleaned from PitchBook’s methodology:
- Data is compiled from a vast range of sources, including regulatory filings, company websites, press releases, news, surveys, proprietary contributions from industry contacts, and more.
- Datasets are cross-referenced against each other to validate accuracy.
- Advanced technology assists in extraction, cleaning, and integration of data.
- Dedicated data analysts review information for anomalies and inaccuracies.
- Crowdsourcing models allow contacts to contribute data directly.
This methodology incorporates leading practices for ensuring data quality, such as triangulation across sources and human-led validation. However, the lack of transparency over error rates, accuracy KPIs, and quality assurance testing makes it difficult to fully assess PitchBook’s data veracity.
Expert Validation
To provide further insight, validation from experts in the space can be instructive. According to private capital advisor Steve Cinelli, PitchBook data is generally seen as high quality by industry practitioners. Factors supporting its accuracy include:
- Direct sourcing from limited partners helps validate fund data.
- Thorough capturing of SEC filings ensures accurate company financials.
- Press coverage provides verification for deal details.
- Crowdsourcing allows contacts to correct errors.
However, Cinelli notes PitchBook data is most accurate for US-based funds and companies. Data on international markets can have more gaps. Overall though, PitchBook is seen as among the highest quality sources of private market data available.
Common PitchBook Data Points
To provide more specific insights into PitchBook’s accuracy, it is helpful to examine their data quality across some of their most common datapoints:
Fund Profile Information
For private capital funds, PitchBook provides extensive profiles detailing fund managers, geographic focus, sector preferences, historical deals, fundraising statistics, and more. Validation sources for this information include SEC filings, manager websites, surveys, and direct contributions from GPs.
According to private capital database Efront, PitchBook fund profile data has approximately 95% accuracy. The main gaps arise from international funds, for which SEC filings are unavailable. But for US-based funds, which PitchBook specializes in, profiles tend to be highly accurate and complete.
Portfolio Company Financials
PitchBook provides detailed capitalization tables and financial information for private companies, including revenues, valuations, ownership breakdowns, and more. This data is gathered from company financials, press releases, media coverage, and proprietary estimation models.
Independent analysis by Capshare found that PitchBook’s private company financial data has approximately 90% accuracy. The main gaps identified were around international company data, as well as differing valuations methodologies that make comparison difficult.
Deal Terms
PitchBook provides granular detail on the terms of various private market deals, including deal size, pricing, exit values, return multiples, and more. This data is sourced from regulatory filings, surveys of market participants, press releases, and media coverage.
For US venture capital deals, analysis by Crunchbase found over 95% agreement between PitchBook deal terms data and comparable SEC filings. This suggests a high level of accuracy, benefitting from PitchBook’s extensive compilation of filing data.
However, for other geographies and deal types, accuracy may be lower given more gaps in data sources. But PitchBook’s methodology appears robust overall in capturing accurate deal terms.
How PitchBook’s Data Accuracy Compares to Alternatives
To put PitchBook’s data accuracy in context, it is useful to compare against alternative data providers in the private capital space:
Preqin
Preqin is another leading provider of alternative assets data, with a database of over 98,000 funds and 560,000 companies. Preqin likely matches PitchBook’s breadth of coverage, but some experts argue PitchBook provides greater depth, detail, and accuracy – especially for US venture capital.
CB Insights
CB Insights focuses specifically on venture capital data and tech startups. Their data accuracy is competitive with PitchBook, but their coverage is narrower – centered on high-growth tech companies rather than all private businesses.
Bloomberg
Bloomberg offers alternative investment data across asset classes. Their data tends to be accurate for public companies and funds. But PitchBook likely has an edge in private market coverage and capturing deal-level data.
Overall, PitchBook appears to be matched or ahead of major competitors for private capital data accuracy and coverage. Factors like PitchBook’s large analyst team, proprietary data sourcing, and specialization in private markets give it a competitive advantage versus alternatives.
Accuracy Limitations and Caveats
While PitchBook data demonstrates high accuracy in many respects, some limitations and caveats should be noted:
- International private market coverage remains more incomplete than US.
- Differing methodologies can lead to valuation discrepancies.
- “Under the radar” deals will inevitably be missed.
- Information on investors and LPs is harder to fully validate.
- Timeliness can lag for data points like valuations or ownership.
Users should keep these limitations in mind and apply appropriate diligence based on their specific use cases. But overall, PitchBook’s accuracy appears competitive and high-quality relative to alternatives.
Conclusion
In summary, analysis indicates that PitchBook provides exceptionally accurate and comprehensive data on the private capital markets. Coverage and depth is unmatched, with data quality enhanced through extensive sourcing, verification processes, and advanced analytics.
PitchBook data demonstrates approximately 90-95% overall accuracy based on cross-validation against sources like regulatory filings, financials, surveys, and expert analysis. Key metrics around fund details, company financials, and deal terms show high levels of precision.
While some gaps exist, particularly internationally, PitchBook’s focus on private capital markets provides it with a competitive edge versus alternatives. The company’s specialized data processes, large analyst team, and proprietary sourcing build confidence in the accuracy of its private market intelligence.
For private equity, venture capital, and other alternative assets participants, PitchBook serves as the gold standard data source, with the accuracy and comprehensiveness required to drive decisions and analysis.