Second Measure, a startup that analyzes credit card data and trends and sends out bi-weekly reports to investors, has raised $20 million in a Series A funding round, with Citi Ventures and Goldman Sachs leading the pack in capital, according to a report from Fortune.
The startup was the brainchild of two software engineers, CEO Michael Babineau and COO Lillian Chou, who used to work at the videogame company Electronic Arts. The company has about 150 clients, including asset managers like Neuberger Berman and venture capitalists New Enterprise Associates.
The two engineers realized that among investment firms, there was a definite lack of keeping up with new analytical technology. The companies had access to the data, but just didn’t know how to synthesize it in a digestible way. Babineau noticed the extent of the problem when a friend at a firm asked him if he knew how to store large amounts of data in spreadsheets.
“That blew my mind,” Babineau said. “He was at a $30 billion assets under management hedge fund – I assumed all of them looked like Bridgewater or Renaissance with legions of quants. But most only have a handful of support, with no technical support.”
Second Measure can organize customer spending habits into categories by company, geography and even per-customer spending. Most companies rely on quarterly reports for information, but Babineau saw the value in non-traditional, alternative data, as opposed to the same old reports and stock price analysis. He realized that his company might be able to give investors an edge.
Alternative data includes social media-gathered customer sentiments and even foot traffic gleaned from satellites. According to Opimas, a financial consulting company, alternative data will be a hot commodity in the near future, with asset management firms expected to spend $7 billion on it by 2020 – up from $5 billion last year.
“The opportunity to leverage the data in a new and creative way is not only exciting in the investing space, but also across the economy,” Citi Ventures Managing Director Luis Valdich said. “Within the corporate world, companies can track how the competition is doing in real time.”