When five investment banks collaborate to create a startup, it is a fair bet it will have the backing to scale up quickly.
Visible Alpha, based in New York, is working its way out of beta—though it still has a ways to go—with commitments for $30 million in financing in its pocket from a consortium of Bank of America Merrill Lynch, Citigroup, Jefferies, Morgan Stanley, and UBS.
What Visible Alpha does is make data and analysis models of corporate financials easier to understand and compare. That way analysts, institutional investors, and others who track the performance of companies can more readily grasp what the information means in terms of forecasting.
Making such information digestible has been a challenge so far because of the disparate way each company might present financials in spreadsheets, says Scott Rosen, CEO of Visible Alpha (pictured).
His company was created by the consortium to distill that data into something more universally palatable for investors. This is the latest example of the way New York’s financial industry legacy is being woven into the local technology scene.
Analysts already put together reports and list trading price targets on companies, Rosen says, but Visible Alpha assembles certain information that might otherwise be lost in the process. “A lot of larger banks have created big databases to pull out some of the metrics for the investors to use,” he says.
But comparing the forecasts from one institution to the next frequently means coming up with ad hoc solutions for coping with databases and spreadsheets. “What we’ve been tasked with is finding a better way of making all that data comparable,” Rosen says. Visible Alpha takes in information from spreadsheets and makes the reports comparable through a combination of machine learning, and hands-on work by data analysts.
Institutional investors are the initial target audience for Visible Alpha, as well as analysts at hedge funds, Rosen says, who want to validate their predictions. “This is one of their critical pain points,” he says.
After the commercial release of Visible Alpha, he says, the platform could also appeal to a broader, financially savvy-audience. “Through the platform, you can understand where the investment controversies are and what the differences of opinion are between analysts,” Rosen says.
With its backing from the investment banks, Visible Alpha will not be looking for capital outside of its strategic partners, though more could join the consortium, he says. The company is also in rapid expansion mode, he says, as it gets closer to commercialization. “We’ll be well over 100 people within the year, a big chunk of that is data operations,” Rosen says.
