Companies House just announced that it's making all of its documents available for free in 2015. People immediately said to me: you provide company information, surely this is bad news for you?
In fact, I think it's great news, and here's why:
1. First off, it shows once again that the UK is a pioneer in data transparency, the first country anywhere to establish a truly open register of business information. DueDil kickstarted the transparency revolution back in 2011, providing vast amounts of company information for free, and we love any moves to open up more.
2. The second effect is to bring visibility to the very real problem around private company information.
Let me share some facts: according to the European Commission, small and medium-sized enterprises (SMEs) accounted for 99.8 percent of the number of businesses, 67.4 percent of employment and 58.1 per cent of GDP in the European Union in 2011. These SMEs are almost entirely privately owned, with few formal reporting requirements.
So, while you can find out pretty well anything you want about a publicly quoted company, it's very hard to understand the story behind the bulk of the world's economy - its privately owned businesses.
This has serious consequences for all of us. For example, across Europe alone, there's an estimated €250bn shortfall in lending to small and medium-sized businesses, largely caused by a lack of properly organised information on these companies. It's reckoned that, for similar reasons, there's a €450bn misallocation of finance across the EU - loans to SMEs that default in the first year *. This is missed opportunity, and inefficiency, on a massive scale.
It's important to point out that information on private companies is actually out there; it's just in all the wrong places. It's locked up in silos - inside government agencies and tax authorities, with the companies themselves and their banks, on websites. In other words, it's disorganised. DueDil's vision is to organise the world's private-company information so that it can be put to proper use for everyone's benefit. We haven't raised $22m in the past 12 months to flog company documents!
Bringing order to the world's private company information is no small task, and it doesn't even factor in the emerging datasets that may turn out to be even more illuminating than traditional company accounts. As business speeds up, it's my bet we'll soon need tools that give us real-time sensitivity to private-company performance, but that's for another day...
3. Finally, this announcement is good news because it will encourage competition and grow the market. The job of Companies House - of any registrar - is to make company information available to the public. This announcement actually makes our life better because it allows us to move on to the more important issues of contextualising that information, linking it together, helping people to analyse it, and making it useful.
In and of itself, data and documents aren't useful. What makes them useful is the information and insight that you can gain from them. To turn data into information and insight, you need to make it searchable, discoverable, contextualise it, map it and make it accessible; you need algorithms to help people make decisions.
As Companies House itself says, this move "will open up opportunities for entrepreneurs to come up with innovative ways of using the information." I couldn't agree more!
* Extrapolated from figures within "Financing SMEs and Entrepreneurs: An OECD Scoreboard 2012; (April 2012)" and "BIS; Boosting Finance Options for Business; (London, March 2012)".