In discussing the growth of London-based expert networks last week, we erroneously stated that AlphaSights Ltd. was smaller than its rival Cognolink Ltd. In filings released earlier today, AlphaSights revealed that it doubled its revenues from 2012 to 2013 and its 2013 revenues were 35% larger than those of Cognolink.
AlphaSights grew its revenues from £9.3 million (US$14.9 million) in 2012 to £18.8 million (US$30.1 million) in 2013, a growth rate of 102%. The firm is solidly profitable and is paying large dividends to its owners. Employee headcount grew from 63 in 2012 to 108 in 2013, and the firm is still hiring like mad.
AlphaSights is organized differently than most expert networks, which have distinct roles between research managers who service client requests and salespeople bringing in new accounts. AlphaSights has few if any dedicated salespeople. Instead, the firm incentivises its research managers to grow business. The model is clearly working for them.
Critics question whether incenting research managers for growth increases compliance risks. With a small (but growing) US footprint, AlphaSights did not suffer the intense compliance pushback experienced by its more established US-based rivals in 2010 and 2011.
Today’s filings were the first public disclosures of AlphaSight’s profit and loss. Under UK rules, companies are exempted from disclosure if they meet two of the following three tests: 1) Annual turnover must be £6.5 million or less; 2) The balance sheet total must be £3.26 million or less; 3) The average number of employees must be 50 or fewer. Given that AlphaSight’s 2012 revenues were well north of the £6.5 million test and 2012 employees exceeded the 50 threshold, it is not clear on what basis it claimed exemption in 2012.
For 2014, the AlphaSights directors “believe that there is considerable opportunity for the continued development in the activities of the group.” Understated, but highly credible.