Yesterday, alternative data engineering firm, Crux Informatics announced that it had closed a $20 mln Series B funding round. Investors in the latest financing round include quantitative hedge fund Two Sigma, plus previous investors Goldman Sachs and Citigroup.
Series B Funding Round
Founded in 2017, Crux Informatics provides outsourced data engineering to clean, normalize and transform raw data into formats specific to each client, as well as offering investors an online portal of third-party data sources.
The latest funding round, led by quantitative hedge fund Two Sigma, and including previous investors Goldman Sachs’ Principal Strategic Investment Group and Citigroup, totaled $20 mln. The purpose of raising this capital is to continue to scale and improve the Crux platform so that clients can access its technologies and services for cleaning, managing and preparing data for analysis.
Crux Informatics CEO, Philip Brittan explained the strategic rationale for the latest investment round, “We have built a solution for what has become a significant pain point for financial services firms – ingesting and managing the tremendous amount of data that is now available to them. We are transforming the data industry making it possible for our clients to reap the benefits from improved data flow, which translates into more actionable insights and alpha. This funding will help us continue to drive innovation, which will scale our business and the data set solutions we offer to our clients.”
At this point, Crux has raised $41 mln in funding over 3 rounds. Prior to the latest $20 mln Series B funding round, Goldman invested $10 mln in a Series A round in November 2017; and, Citigroup invested $11 mln in a corporate round in March of this year.
Last month we wrote about Two Sigma’s investment in Crux, though we did not know how much the hedge fund invested. Now we learn that the Two Sigma deal was part of a larger Series B funding round where both Goldman Sachs and Citigroup decided to make follow-on investments in the alternative data engineering provider.
As mentioned in the past, outsourcing the back end processing and management of a large number of datasets, enabling investors to do what they do best – identify and generate alpha from this data – is a sensible business rationale for Crux. In addition, the fact that Two Sigma, Goldman and Citigroup have invested in the business at this point suggests that Crux offers a compelling technology platform, and the firm is starting to gain some meaningful traction.
One of the big questions we have about the Crux business model is whether it can effectively scale, or whether it will require a substantial amount of customized software development. Clearly, a more scalable business will be a much more profitable one. Of course, this may be where Crux’s “data marketplace” concept comes into play. However, as we have mentioned in the past, this space is competitive and getting increasingly more competitive every day. We will have to wait and see how Crux addresses these issues.