CNBC Disruptor 50

How we chose 2016's most disruptive innovators

For all the talk we heard of bubbles, down rounds and dead unicorns in the past year, the desire for start-ups to be called a Disruptor has only grown. More than 750 companies submitted the CNBC Disruptor 50 nomination form back in January — more than double the number of nominees from 2015.

The ultimate result is a list of 50 companies that collectively have the potential to impact multiple multibillion-dollar industries. They have raised over $41 billion in venture capital at a combined implied valuation of $242 billion, according to PitchBook. And they represent breakthrough ideas coming not just from the start-up hotbeds of Silicon Valley, New York City and Boston but also from a few places new to the Disruptor 50 — from Provo, Utah; to Paris, France; and Bangalore, India.

Meet the 2016 CNBC Disruptor 50 companies
The complete history of the CNBC Disruptor 50
Facebook CEO Mark Zuckerberg speaks during the remote bell ringing ceremony for the opening of trading, May 18, 2012.
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It's been a strange 12 months for the incumbent Disruptors. Last October, Pure Storage became the first of the 2015 class to go public. Its debut was seen as a bellwether for future tech IPOs, and unfortunately, it was. The same was said for Square (a Disruptor in 2013 and 2015) when it went public in November. The tech IPO scene has been frozen since, and it may take a Disruptor to unfreeze it. Nutanix, a 2015 Disruptor, filed an S-1 in December, and its deal has been on hold since. Twilio (#39 on the 2016 Disruptor 50 list) filed its S-1 late last month.

The cooling off in the IPO market has done little to stop elite start-ups from raising money at ever-increasing valuations. At least 52 of the 750 companies nominated for this year's Disruptor 50 list have valuations of $1 billion or more, but only 35 of these unicorns made the final list. As we have learned in four years of identifying and honoring the most disruptive companies, the idea and the execution matter far more than the cash alone.

Here's how we picked the 2016 CNBC Disruptor 50.

Companies nominated were required to submit a detailed analysis, including key quantitative and qualitative information. All submitted materials were reviewed, and all 750 companies were researched and scored by a dedicated team of CNBC staff. Companies were scored using our proprietary blend of quantitative criteria, such as the amount of venture capital raised, off-the-record information on sales and user growth, along with qualitative criteria, including originality, scalability and creation of a new market or ecosystem.

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New this year, we enlisted the help of three data partners, who provided consistent data for a range of new and old criteria. PitchBook provided data on fundraising and implied valuations (current as of June 1). We used IBIS World's database of industry reports to compare the companies based on the industries they are attempting to disrupt. Finally, MCAM International provided new visibility into how nominee companies protect the technology at the foundation of their business models. Using its unprecedented database of patent, trademark and other intellectual property information, MCAM revealed which of the 750 nominees had such protection and rated the quality of those protections. (Special thanks to Dex Wheeler at MCAM who developed the scoring for these important criteria.)

After the criteria was determined and the data and scoring completed, CNBC's Disruptor 50 Advisory Council — a group of 34 leading academics in innovation and entrepreneurship (see list below) — ranked the criteria by importance in ability to disrupt established industries and public companies. This year the council found that "creating a new market or ecosystem," scalability and originality were the three most important criteria, and these categories received increased weighting. However, our ranking model is designed to ensure that companies must score highly on a wide range of criteria to make the final list.