I am kicking off this blog with a post on an institutional research provider called Seed Alpha.
While I will be covering a number of retail-facing fintech start-ups, I am currently on the look out for interesting business ideas around the institutional market, and this one makes a lot sense that it almost seems a no-brainer.
Name: Seed Alpha
Based in: New York and Hong Kong
Market segment: This is a service targeted mostly at institutional investors, but potentially also super-sophisticated retail investors?
Problem it’s trying to solve: Investors overpay for research through fees and commissions, and small research shops have limited exposures to investors that may find their research value-adding. This marketplace closes the demand and supply gap.
From the public information available, it sounds like the service/product will have the following interesting features.
For consumers of research:
Only pay for what is consumed, although talks of an annual subscription fee would suggest a subscription plus pay-to-play model, and only buy the reports that are needed. This takes away the need to manage various subscription services will other research providers and ensure the cost of research becomes easier to justify and is more transparent to clients of those institutional investors.
Communicate with researchers themselves, asking questions, as well as commissioning follow-up reports on areas of interest, making the materials received much more specific and tailored to its own needs.
Annotate the materials and share them across the firm, again squeezing more value out of these pricey pieces of intelligence.
Discovery engine of fund research materials.
For providers of research:
A marketing and sales channel for research providers. Smaller investment SEO research firms that might otherwise not have had the exposure will find their work available to a wider public.
Why is it interesting?
Marketplaces that satisfy a gap in both supply and demand is always interesting. Seed Alpha wants to increase both efficiency and transparency. And if enough small research shops sign up to the service, it might very well trigger interest in the larger research houses as well. The trick in the meantime is to generate enough interest from the buy-side when the breadth and depth of research content on the site is still shallow, and when those potential customers still have to manage their multiple subscriptions with their investment banks or even Bloomberg itself.