Hedge Funds Craving On Big Data
From DealBreaker:
If you’re building a startup that collects unique data, hedge funds want to talk to you… by yesterday.
If you work at a medium to large hedge fund that doesn’t have a data
team, rest assured that you’ll be seeing some kind of data initiative in
the next 12-18 months because everyone and their mother’s boss is
looking for new sources of edge/alpha on the buyside.
Here are examples of company archetypes for data deals we’ve been
seeing and some metrics around revenues those companies are commanding
for data:
- Consumer spending data – Yodlee was recently profiled in WSJ and
has subscription fees of $2M per fund for consumer spending habits.
Yodlee was acquired for $800M by Entrust, it’s unclear whether or not
they’ll still be selling this data to hedgies after the acquisition is
complete.
- App engagement data – AppAnnie has grown to a team of 25 salespeople
selling app engagement data for public companies to Finance customers.
Price varies based on customer AUM.
- Advertisement spending data – MediaRadar tracks ad spend on
real-time basis. Sells ad-spending data feed to select hedge funds for
annual 6-figure contracts
- Agriculture data – Descartes Labs measures photosynthesis using
proprietary imaging technology developed at Los Alamos. Selling feeds on
corn production and other crops to commodities traders and other
clients at 6-figure annual subscriptions.
- POS data – a variety of Point of Sale technology providers anonymize
SKU-level sales data and sell to hedge funds, mostly through third
party data brokers but some are starting to go direct to the buyside.
- Social data – Companies like TickerTags (a ValueStream portfolio
company) are extracting social mentions of brands and connecting them to
the underlying public companies. There are also a plethora of social
sentiment startups monitoring mentions of stocks in social feeds.
Twitter itself has become a data company by selling their “decahose”
(10% of all tweets) and full “firehose” of tweets for 6, 7 and even 8
figure contracts depending on the customer and amount of data requested.
While there are examples of companies building sales teams
themselves, most startups are resource-strapped and aren’t able to do it
themselves, e.g. packaging the data, marketing data properly to a
buyside client, building signals, etc. We’ve already seen instances of
startups that wanted to work with brokers, then reversed course because
they decided they could do it themselves.....MORE
