Alternative data has started to pay.
That's one conclusion to take from today's news that alternative data startup Thinknum had raised $11.6 million in a series A round from investors including Green Visor Capital, according to a statement. Joe Saunders, the Visa CEO who took the network public in 2008, is the fintech VC's general partner.
Thinknum will use the money to invest in the product, find new clients like corporations, and hire engineers to its staff of about 20, according to co-founder Justin Zhen. He declined to comment on valuation of the company he started with Gregory Ugwi.
"We cover 400,000 companies but we want to cover every company in the world," Zhen said.
Thinknum scrapes websites, or extracts information using an automated software program, and then puts the data into easy-to-use formats so investors and analysts can examine what it says about everything from job listings to store locations to reviews. The service is simple to use and doesn't require a technology or data science background.
The startup, which raised $1 million in seed money from investors including Green Visor in 2014, has been profitable since 2016. It's doubled revenue in each of the last two years and grown its roster of clients into the hundreds. Eight out of the top 10 investment banks use it.
Thinknum is one company among hundreds in a the growing field of alternative data, techniques to find, extract and provides insights into a company's health that aren't readily available from conventional sources like financial reports and economic indicators. Subsets include web-scraping, satellite imagery, flight tracking, mobile device geolocation and oil ou put. Spending by asset managers on alternative datasets is around $3 billion and growing, according to JPMorgan.
Thinknum has gained a following among Wall Street research analysts, which rely on the company to analyze non-traditional data sources. Bank of America analysts have used Thinknum to analyze data from corporate rating website glassdoor.com and found that employee sentiment was highly correlated to a company's future performance. Jefferies analysts looked at 11,000 job listings in the aerospace and defense industries and found that 50% of all openings were in the Washington DC market.
In September, Citigroup became one of the first Wall Street banks to give clients access to alternative datasets from its platform when it started giving clients access to data collected and analyzed by the five-year old startup.
Thinknum is at the forefront of a growing trend. One out every 20 web page visits last year was done by a hedge fund or sell-side research institution scraping websites for information, according to a report by Opimas Analysis. This comes out to roughly 10.2 billion page visits a day, equal to the daily users of Google's search function, and it's expected to "grow rapidly."
By 2020, managers' web page visits for the purpose of scraping will eclipse 17 billion and cost more than $1.8 billion — nearly double what it currently costs — as managers invest in software, talent and outside vendors to clean and store the loads of data.
