From health to transport to finance, big data is proving to be a critical tool for competitive advantage. As Geoffrey Moore, the legendary management consultant and author put it, without big data analytics, companies are blind and deaf, wandering out onto the web like a deer on a freeway.
Big data means accurate and timely decisions which translate to capital efficiency and better revenues. In the world of investing, big data is the only path to timely and quality trades for better returns. Without big data, investment firms would have limited investment options, and even in those, opportunities would be missed.
According to Dennis Walsh, co-head of Equity Research and Portfolio management at Goldman Sachs, the exponential growth in data is forcing investment managers to go beyond conventional data sources to gain information edge.
AI through Machine Learning is making it possible for asset managers to learn quickly from big data and use the knowledge to place profitable trades. Here are ten firms that are disrupting the investment landscape through big data, AI and Machine Learning.
Founded in 2012, Acorns is an investment firm that helps millennials turn spare change into investments. Since its launch, the company has been among the most innovative in the fintech sector in the US and Australia and has won several awards among them the Best New Economy 2015 and Good Design Award 2016.
Acorn has received backing from major institutional investors such as Point72 Ventures, Garland Capital Group, e.Ventures, Greycroft Partners, Jam Equity Partners, MATH Venture Partners, and Sound Ventures.
In 2017, Acorn Australia has introduced a new feature on its app that utilizes Machine Learning to discern user spending patterns, automatically categorize their transactions, and notify them if they are likely to spend more than in previous months. With the new feature, the app can analyze user's transactional data and recommend a budget.
Stash is a US financial technology firm that offers an investment app that enables inexperienced investors to invest in small increments.
As of October 2017, the app had over 1.2 million users.
The growth can be attributed to a total of $28 million capital injection the firm received from investors among them Valar Ventures, Entrée Capital and Silicon Valley-based Goodwater Capital in 2016.
Recently, the firm has raised $40 million in a new round of funding with the aim of improving its technology and data analytics.
Launched in 2015, Numerai is an AI-run open access hedge fund founded by Richard Craib, a South African mathematician.
The firm relies exclusively on algorithms developed by thousands of data scientists across the globe to manage investments.
In 2016, Numerai raised $7.5 million in two rounds of financing from a group of investors led by Howard Morgan, a co-founder of Renaissance Technologies.
At the beginning of 2017, the firm became the first hedge fund to issue its cryptocurrency. In June, Numeraire, as the cryptocurrency is called, was officially deployed to Ethereum and used to pay over 19,000 Numerai data scientists.
Kensho technologies Inc is a data analytics and AI Company that provides big data analytical tools for capital markets.
Its partners include Goldman Sachs, Morgan Stanley, JP Morgan Chase and Co, Wells Fargo & Co, S&P Global Inc, NBC Universal, and others.
In February 2017, the firm raised $50 million in its second round of funding, pushing its value to $500 million.
Kensho uses Natural Language Processing to query billions of unconventional data sources and provide insights to investment banks. According to Forbes, Kensho Global Event Database is one of the largest repositories in the world today.
Founded in 2010, Alphasense is a financial technology company that offers a specialized search engine for investment professionals.
The search engine uses Natural Language Processing to sift through data and cut through noise.
The firm has over 500 corporate customers including investment firms some with over $3 trillion in assets under management.
Alphasense’s principal investors include Soros Fund Management, Quantum Strategic Partners, Horizon 2020, and First Fellow Partners.
Wikifolio Financial Technologies is a social trading platform which allows experienced investors to implement and publish their trading ideas in Wikifolios for other investors to benefit from their expertise.
Through big data analytics and AI, the firm enables traders to turn their strategies into fully fledged financial products (Wikifolio Index Certificates) which are then listed on a leading European stock exchange.
Wikifolio partners include Michael Grabner Media, VHB Ventures, SpeedInvest, and Lang & Schwartz.
Founded in 2009, Dataminr is a tech firm that uses advanced analytics to scan Twitter and other public sources for events that can be translated into profitable trades.
The firm uses advanced machine learning tools to trawl social media and other sources for breaking news that can move the markets and report it to its clients as it happens.
Since launch, Dataminr has raised over $183 million in funding from investors such as Fidelity Investments, WorldQuant Ventures, Credit Suisse, Goldman Sachs, Wellington Management Company LLP, among others.
InvestCloud is a financial technology company offering digital financial solutions that are pre-integrated in the cloud to individual and institutional investors.
The firm provides investment managers an Interactive Data Repository for storage of big data and also a cloud-based portal for a complete and transparent view of their world anywhere at any time.
InvestCloud was founded in 2010 and has since then grown its clients base to over 650 institutions with over $1.7 trillion in assets. Since launch, the firm has raised over $54 million in four rounds of funding. Its investors include JP Morgan, FTV Capital, Kern Whelan Capital, Polar Capital Management and Altos Ventures.
With over 2 million users, Robinhood is an investing app that uses an AI-based trading system to enable ordinary people to trade stock with zero broker fees.
As of July 2017, the app value stood at $1.3 billion after raising $110 million from DST Global, Thrive Capital and Greenoaks Capital. Other investors in the deal included NEA, Index Ventures, and Ribbit Capital.
In total, Robinhood has raised a total of $176 million in three rounds of venture capital funding.
With over $174 million in 5 rounds of funding, Sentient is one of the best funded AI companies today. The firm was founded in 2007 by Babak Hodjat, Peter Harrigan, Adam Cheyer, and Antoine Blondeau.
Sentient principle investors include Horizon Ventures, Tata Communications, and Access Industries.
In regard to investing, the company applies AI and Machine Learning to manage hedge fund positions.