Adaptive Management supplemented its newly launched Discover platform with the ability to view how well alternative data tracks the key metrics of publicly traded stocks. The new feature is designed to provide an initial ‘sniff test’ to determine to whether investigate a new data source further. The release represents a further step toward the company’s goal of creating a fully featured back testing sandbox for new data sets.
The Discover platform
Adaptive Management launched the stand-alone Discover platform three months ago, designed to source and trial new data vendors. The initial release included a data catalogue for about 100 data vendors detailing frequency, history, pricing along with descriptions of the datasets offered. The catalogue has now doubled to 215 vendors, which can be searched by the tickers covered by the data sets or the category of data offered. The Discover platform also includes a data sourcing team to handle bespoke projects.
The newest feature allows users to compare selected alternative data to the KPIs of companies of interest. Users can select key metrics for a given stock, such as sales or North American sales, and display how well alternative data tracks the metric as a graph and table.
“Our new capability allows users to get a high-level look at a dataset, without requiring access to the actual data. This alleviates the need to go through the full compliance and legal steps required for accessing the underlying data,” said Adaptive Management CEO Brad Schneider in an interview. “Our ultimate goal is to shorten the data acquisition process from weeks to hours.”
The new data visualization tool is currently available for forty vendors representing approximately one hundred data sets, with more data being added to the platform.
The next steps for the Discover platform are to add full-fledged sandboxing tools which permit users to launch an SQL workflow, run queries on a new data set and see the results. The firm intends to release the full back testing capabilities in the first quarter of 2020.
The DataMonster platform
The company’s core DataMonster platform is sold as a turnkey alternative data platform which facilitates the onboarding of new datasets. Its primary focus is to visually combine and compare data across vendors and datasets. Clients can leverage Adapative Management’s enterprise license with Factset to incorporate FactSet data into the evaluation. During trials or once data is acquired, users do not need to download files or connect to APIs to access data. All data is mapped to a common ticker taxonomy.
Clients are primarily hedge funds but include sovereign wealth funds and private equity firms. Adaptive Management’s business model is partly a seat-based subscription model in which clients purchase access for specific users within their organization. (Subscription costs of the datasets used on the platform are separate.) The alternate business model is a service-based model for its data sourcing and R&D service, as well as DSaaS (data science as a service) for bespoke projects. Unlike other alternative data marketplaces, Adaptive doesn’t charge sales commissions to vendors when it generates new business.
Adaptive Management background
Adaptive Management was co-founded in 2014 by Brad Schneider, an MIT-trained computer engineer who was a portfolio manager at Tiger Management, along with co-founder Kevin Thompson, a former security researcher at the National Security Agency. After graduating from MIT, Schneider had co-founded a small data analytics company that worked with Fortune 500 companies to help them mine customer insights from transaction data. After becoming a portfolio manager in hedge fund industry following the technology sector, he began using different datasets to support his portfolio decisions, which was the initial impetus for DataMonster.
Based in New York’s Silicon Alley, Adaptive Management has 30 employees and its website currently lists 3 open positions. The firm completed a seed round in 2016 and is currently raising a Series A funding round.
Rather than building an alternative data marketplace, Adaptive Management is positioning itself as a data sourcing sandbox. This represents a shift from its original positioning as a turnkey alternative data platform as the firm de-emphasizes its data modeling capabilities.
Adaptive Management’s Discover platform will be most similar to BattleFin’s Ensemble platform which is also intended to find, test and evaluate alternative data sources. Refinitiv made a strategic investment in BattleFin earlier this year.
Discover’s data catalogue competes with Yipitdata’s promotional website, alternativedata.org, which lacks depth of information but is freely available. More direct competitors are London-based data scouting firm Neudata, which recently raised $1 million in a third round of financing, and Dublin-based Eagle Alpha, which raised $2.4 million in August. However, neither of the data sourcing competitors offer sandbox capabilities and, unlike Eagle Alpha, Adaptive Management does not charge sales commissions to vendors for recommending them, relying solely on fees from its buy-side clients.