Hockeystick’s Taxonomy: Leveraging Standardized Data in Canada’s Private Capital Ecosystem
Hockeystick has been supporting financial reporting for private companies for many years. The company’s aim is to provide accurate data by drawing from a number of sources — funds, startup programs, companies, etc. In doing so, however, they often come across several data sources that describe the same metrics and entities, but use different terminologies.
Consequently, Hockeystick has been rethinking how it handles data and what can be done to mitigate these data mapping issues. This is precisely why they, with the help of CVCA’s research and data, are creating their own standard “Hockeystick taxonomy”.
What is a Taxonomy?
A data taxonomy is simply a hierarchical structure that inherently separates data into specific classes based on common characteristics. The most notable example of a taxonomy is the Linnaean taxonomy, used for the categorization of organisms and binomial naming of organisms.
This classification system was developed by Carl Linnaeus, a Swedish botanist who is considered to be the father of modern taxonomy.
Why are Taxonomies Necessary?
Classifying data aims to eliminate redundancy and promote the reuse of data in systems. More importantly, however, taxonomies frequently motivate the need for a standard that becomes the metadata framework against which information is reliably reported and consistently compared.
From the CVCA’s perspective, having standardized data on companies, funds and investments will allow everyone to “speak” the same language. We believe that Hockeystick’s taxonomy will make it easier for funds to measure performance, communicate with limited partners and improve deal flow.
Why is Hockeystick Creating a Standard Taxonomy?
While current standards exist in the immediate domain of financial reporting, like the US Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS), Hockeystick is looking at the bigger picture by attempting to standardize a taxonomy that supports the entire private market, in addition to the financial reporting and accounting component.
That means Hockeystick’s taxonomy will extend beyond venture capital and private equity, as it will encompass data from accelerators, incubators, angels, lenders and government agencies to form a financial data network. These industries create a complete ecosystem of funders; and it’s time that data models, including ours, caught up to this reality.
Hockeystick’s taxonomy will also allow the CVCA to make accurate comparisons, analysis and benchmarks, enhancing our research capabilities on Canada’s private market.
How Does this Relate to CVCA InfoBase?
We announced back in September our new partnership with Hockeystick to develop InfoBase 2.0. Hockeystick’s data taxonomy is the first step towards this. Our aim is to launch InfoBase 2.0 using the new data taxonomy — making it possible for you to search a huge database of private companies, with high quality data organized in a standard format for easy mining.
Stay tuned for more details!