AI Startup Focuses on Helping Independent Boutiques Leverage Machine Learning

Causality Link, a start-up artificial intelligence processing provider co-founded by an IBM data sciences heavyweight, is targeting independent research firms as an initial vertical for its platform.  Although the firm is early stage, it could be an interesting fit for IRPs seeking to integrate AI into their research process.

The firm was co-founded in 2016 by Pierre Haren, Ph.D., an expert systems pioneer who has been working in the AI space since 1983. He co-founded expert systems firm ILOG which was acquired by IBM for $340 million in 2008.  He continued working with IBM for seven years, heading its advanced analytics unit within its professional services business which includes management and strategy consulting.

In contrast to black-box systems, Causality Links is predicated on combining expert knowledge of causation – not simply correlation – with machine learning and natural language processing.  It is positioned as a productivity tool designed to efficiently scan news sources and other content for relevant information and also as an enhancement to research product, adding additional insights.

The firm is marketing to independent research firms as well as asset managers, seeking to collaborate in refining its AI platform.  It plans to charge around $50,000 for a six month relationship.

The firm completed a seed round last year and is in a market validation stage before entering the next round of funding.  The firm is partnering with France’s Toulouse School of Economics which will provide Causality Link access to the institution’s library of content in return for an equity stake in the firm. Jean Tirole, chairman of the institute and a winner of the 2014 Nobel Prize in Economic Sciences, will join the Causality Link advisory board ex gratia.

Our Take

There are a few different investment research use cases for machine learning and natural language processing (NLP).  One is to automate existing manual processes.  An example is boutique New Constructs which uses NLP to extract data from the unstructured portions of financial filings to extend its coverage with a minimum of additional staff.  Standard & Poor’s is leveraging its $550 million acquisition of Kensho Technologies to expedite the launch of new datasets.

An example of using AI to innovate new research product is Prattle, which used NLP to replicate Fed Watchers and other central bank analysis, then turning its attention to assessing earnings announcements. Because Causality Link is early stage, it would require dedicated effort and resources by boutiques seeking to leverage its platform.  Although the $50k price tag might seem daunting, it is a few orders of magnitudes less than what S&P paid for Kensho.