CrunchBase Is Spinning Out, Backed by Emergence Capital

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Eight-year-old, San Francisco-based CrunchBase looks to become a standalone company in the very near future. According to several sources, the unit, which calls itself the “definitive database of the startup ecosystem,” is finalizing a term sheet with the venture firm Emergence Capital Partners for an investment of between $5 million and $7 million.

AOL, we’re told, remains a “significant” investor.

It’s both the closing of a chapter for CrunchBase, and the beginning of a new one.

The unit, which currently attracts two million unique visitors each month and employs 25 people, began talking with investors nearly a year ago, well before CrunchBase’s parent company, AOL, was itself acquired by Verizon in $4.4 billion deal.

Says one person familiar with AOL’s thinking: “AOL agreed to spin out CrunchBase because an enterprise data business isn’t in its wheelhouse; it also recognized that [CrunchBase] is a potentially valuable business.”

An AOL spokeswoman declined to “comment on the rumor” that CrunchBase is spinning out imminently. CrunchBase executives did not respond to requests for more information. Emergence Capital also did not respond to numerous requests for information.

Executives at TechCrunch — founded by CrunchBase founder Michael Arrington and sold to AOL alongside CrunchBase in September 2010 – also declined to comment, citing company policy.

Two sources say CrunchBase was engaged with a different lead investor when it first began its roadshow last year. According to these people, Data Collective, the San Francisco-based firm, was interested in leading a round that would enable the company to spin out of AOL. But the firm and AOL disagreed over the future of the company and who would lead it.

Data Collective did not respond to a request for comment by our press time. CrunchFund (founded by Arrington following the sale of TechCrunch and CrunchBase) also did not respond to our requests for comment.

With Emergence, based in San Mateo, Ca., CrunchBase lands an investor known for being a software-as-a-service specialist.

That should come in handy.

According to one source, CrunchBase — which has grown restrictive in recent years about how it licenses out its data — will begin selling more of the information it collects via licenses that it sells to venture outfits and research firms, among others. Indeed, as part of the Emergence round, the firm will be installing a senior executive to oversee some of these efforts, say two sources.

Emergence will likely look to add co-investors, too, say the people with whom we spoke. For right now, however, “They just want to get the main close down and get the deal done.”