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Big alt-data budgets help hedge funds get an edge. Here’s how one data company is taking a page out of Amazon’s book to level the playing field for new managers.

Big alt-data budgets help hedge funds get an edge. Here’s how one data company is taking a page out of Amazon’s book to level the playing field for new managers.

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Thinknum, the web-scraping alternative data provider, was a winner of the GameStop-fueled trading frenzy that lost Melvin Capital billions at the end of January.

The data provider, as reported by Insider, created a new dataset focused on Reddit boards and other forums where retail traders were talking shop like Seeking Alpha and Stocktwits.

But the firm kept getting feedback during its media tour which included an appearance on CNN: The smallest, newest funds out there can’t afford this data, but desperately need it.

“We got a lot of feedback about who we serve in general,” Justin Zhen, cofounder of Thinknum, said. “A lot of smaller funds reached out, and they were quite upfront about pricing.”

Data budgets have traditionally been one of the big differences between a freshly launched fund and a multi-billion-dollar manager with dozens of data scientists. While firms like Point72, Citadel, and more have built out impressive data teams that talk to hundreds of potential data providers, new funds have to debate which dataset is worth paying for.

As a result, Thinknum has launched a new program named Spark to even the playing field, Zhen said. It is explicitly targeting new funds with less than $50 million in assets that need data. The program offers discounts on data as well as buy-now-pay-later plans, and helps new funds with the infrastructure needed to digest the 30 alternative datasets Thinknum offers.

“We’re on a mission to back emerging fund managers to help you build a scalable business,” Spark’s webpage reads.

Zhen said he modeled the program off one Amazon offers for its massive AWS division. Thinknum, Zhen said, got discounted rates from the web services division for two years through the company’s AWS Startups program, and have been clients ever since they were founded in 2013.

The goal would be for these small funds to soar, partially thanks to the data they are getting from Thinknum, and convert into full-paying funds down the road. Zhen believes the alternative data industry, which is still nascent despite becoming more institutional over the last couple of years, will benefit from working with investment firms that can’t afford to pay full price right away.

He said there was major interest in the firm’s Reddit-related data, but also across the firm’s entire catalogue of data streams such as commercial REIT database that shows vacancy rates at different properties and a jobs listing dataset that provides a breakdown on which public companies are hiring.

“Getting more firms to use alt data from the beginning is a good thing for the industry as whole,” he said.

SEE ALSO: How hedge funds are tracking Reddit posts to protect their portfolios after the Wall Street Bets crowd helped tank Melvin Capital’s short positions

DON’T MISS: Bloomberg just paid more than $100 million for an upstart alt-data player. Here’s why that marks a huge turning point for a once-fringe business.

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