Data Management

05:51 PM
Connect Directly
Facebook
Google+
Twitter
RSS
E-Mail
50%
50%

This is Why Data Startups Are Disrupting Financial Analysis

A new generation of startups is making financial analysis easier, with open, collaborative and visually intuitive, cloud-based platforms.

Business Models: Turning a Profit?

While all of these ideas add value, Honore says the challenge is turning them into revenue model. Companies like Estimize are forming partnerships. Estimize struck an agreement with Bloomberg to provide its earnings estimates along side the Wall Street consensus estimate data.

"Creating something that's cool for a smart person isn't as hard as it used to be, says Honore. "But creating something that makes that cool idea into something that makes money is still proving to be hard," he says.

Thinknum's Zhen says he plans to offer hedge funds the opportunity to run their models on distributed computers. Zhen says the firm's cloud-based distributed computing network is of value to hedge funds. Quantitative analysts that develop a very complicated model on their computer can take hours to run, whereas with Thinknum's distributed computing model, one server is able to leverage thousands of services all hosted on the cloud within minutes.

Calling up a bunch of hedge funds and selling them on privatizing their model, won't be easy, maintains Honore. "If they call up Mr. Hedge fund and tell them this will cost them $500 a month," they will find that "if you have buy side attached to your name, you are cheap," says Honore. In addition, Honore contends there 's not an enormous market for analytics on a one-off basis. "The real value ultimately is in amalgamation of all of these platforms," he says. The real value is to get larger technology player that already caters to hedge funds to distribute a startup's analytics for a revenue share," he says. For instance, he notes that Estimize data is distributed through a Bloomberg terminal. "I don't think that precludes that."

But innovators like Drogen see their model as different and more efficient. Startups of the past like Bloomberg, FactSet, S&P Capital IQ and Thomson Reuters are terminal based companies "whose livelihood relies on selling terminals," says Drogen. "They not free models; they're pay to play models," he says. "I think you can build a bigger company by giving a core piece of it away for free and you get a bigger community and wider range of people that are willing to pay, "he says.

Also, these are enterprise software models that tend to have an expensive sales force to sell the big-ticket products. Rather than hire an expensive sales force, Estimize has a head of institutional relationships and marketing to call upon the hedge funds. The same person, who tells them they can go on the platform and contribute estimates for free, is also the person who tells hedge funds they can pay a fee to receive the data in their models. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

Previous
5 of 5
Next
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
IvySchmerken
50%
50%
IvySchmerken,
User Rank: Author
2/24/2014 | 3:15:47 PM
re: This is Why Data Startups Are Disrupting Financial Analysis
Making life dramatically easier for institutional investors is definitely the way to attract attentions from customers. The quality and accuracy of the financial analysis is important, but without ease of use, why would anyone switch or take on a new provider? I agree that disruption doesn't mean destruction. Startups can partner with the larger financial information or software providers to gain distribution since they already have the audience.
IvySchmerken
50%
50%
IvySchmerken,
User Rank: Author
2/24/2014 | 3:11:42 PM
re: This is Why Data Startups Are Disrupting Financial Analysis
I totally agree. Startups today can test their ideas with cloud-based infrastructure without incurring the cost of a fixed capital investment. This elastic model is helping startups scale up when they need to. They can develop their products, sales/marketing and distribution without allocating scant resources to servers and just keeping the lights on.
Nathan Golia
50%
50%
Nathan Golia,
User Rank: Author
2/21/2014 | 3:44:09 AM
re: This is Why Data Startups Are Disrupting Financial Analysis
Yes, the cloud goes a long way in helping new entrants quickly fill the need for certain capabilities in markets. Defraying the cost of infrastructure goes a long way in making any company effective quickly.
ArielY766
50%
50%
ArielY766,
User Rank: Apprentice
2/18/2014 | 2:56:03 PM
re: This is Why Data Startups Are Disrupting Financial Analysis
Excellent article on the power of cloud technology and innovation to radically change the ways that financial analysis is performed. Thetica Systems is proud to be one of those cloud based innovators, making life dramatically easier for institutional investors in ABS, CLO, RMBS and CMBS bonds.

I believe itG«÷s also important to note that disruption doesnG«÷t have to equal destruction. By working in partnership with leading industry providers, weG«÷ve been able to greatly enhance the experience for our mutual end users.
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - July 2014
In addition to regular audits, the SEC will start to scrutinize the cyber-security preparedness of market participants.
Video
5 Things to Look For Before Accepting Terms & Conditions
5 Things to Look For Before Accepting Terms & Conditions
Is your corporate data at risk? Before uploading sensitive information to cloud services be sure to review these terms.