HedgeSPA: Predictive analytics platform to help investment pros

Company Name: HedgeSPA

Company Location: San Francisco, Singapore

Company Website: http://www.hedgespa.com

Twitter Handle: @HedgeSPA

Elevator Pitch: Predictive analytics platform to help investment pros harness the power of the internet and massive computing to achieve out­ performance never thought possible.

Year formed: End of 2011 

Number of employees: 10 to ­20 employees

Brief description of the company: HedeSPA’s predictive investment investment analytics platforms help professional investors harness the powers of Internet and massive computing to achieve out performance never thought possible. 

Tell us a bit about your company and what it does.

Today, only the largest asset managers can afford to build their own sophisticated investment analytics platforms, for example, BlackRock Solutions sells BlackRock’s internal analytics platform to non­ competing asset managers. However, most asset managers do not have access to such sophisticated investment analytics platforms due to its exorbitant pricing, high exclusivity and perceived competition. HedgeSPA aims to bring its trusted and equally, if not more, sophisticated investment analytics platform to level the playing field and to encourage fair competition among all asset management players.

How is it different than other companies in the same space?

The HedgeSPA platform allows professional asset managers to offload many day ­to ­day investment and support functions (such as asset selection, portfolio construction, trade execution, and investor reporting) to an industry cloud platform at very competitive prices.

Our distinguishing factors that can help portfolio managers outperform include:

Proven and highly­ customizable tools to guide asset selection by testing all possible combinations of potential asset factors and market sentiments freely available online today;

  • Native tail ­risk ­enhanced portfolio analytics to dramatically improve upside to drawdown ratios;
  • Native multi­ asset, multi ­frequency support for portfolios containing a variety of asset classes targeting different investor taste;
  • Scalable multi­ tenanted, security ­hardened delivery on the cloud, or via virtualized local installations behind user firewalls;
  • Professional ­grade user interface designed and built by domain experts with hands­on investment expertise;
  • Content updated with frequently­ cited market research, including an article on the Greek Crisis top­ rated by Google Search among over one million similar articles; and
  • Combining content, price and delivery advantages from distracted competitors.

What is your revenue model? How will the company make money?

Our scalable platform and low operational overhead coupled with deep analytics sophistication allow us to deliver tier one analytics to our users at tier two or tier three prices, or a fraction of the cost of competing platforms. This market can be segmented into four tiers:

Tier one users (revenue > $1 billion): $1 million or more per year depending on exact scope and requirements. Hosted solution or virtualized on­site solution depending on client security requirement. Tier two users (revenue $100 million to $1 billion): Average site targeting $250,000 per year ­Cloud subscriptions for larger portfolio operations with the ability to share portfolio data and market data.

Tier three users (revenue $10 million to $100 million): Average site targeting $100,000 per year ­ Seat­based cloud subscription for portfolio teams running multiple investor portfolios, with reporting capabilities, with incentives to convert users with five or more seats into site licenses.

Tier four users (revenue < $10 million) spend less than $100,000 on “one­ size­ fits­ all” web solutions: First­ year free limited functionality cloud offering for investors that do not require client reporting capabilities; seat licensing afterwards.

Who is your target market? How big is the opportunity?

The investment analytics market under the most conservative, traditional definition of a “site license” model is about $2 billion per year. By including the “seat license” model combining data and analytics, the total market size can be as much as $25 billion.

  • AssetSPA: Large, Sophisticated Managers e.g. Hedge Funds or Sovereigns White­labelled solutions offered by leading prime brokers. Direct sales to prop trading desks, hedge funds and mega­sized public asset owners
  • EnergySPA: Energy Players and Energy­Linked Asset Owners Track record from Chevron­Texaco. Partnerships with GlobalView (specialist energy data provider) and prominent sovereign consultants advising major producers in the Middle East
  • InsurSPA: Liability­Driven Investors. Track record from AIG, Travelers, Allianz, Skandia. Meeting regulatory requirements for insurers, pensions, endowments (NAIC ORSA or Solvency II) Partnership with NYC­based Insurance and Capital Markets Analytics Practice at leading integrator
  • WealthSPA: Wealth Managers, Private Banks Partnership with third­-party platforms (e.g. core banking systems) and private banks serving external asset managers (EAM). Strategy works around hurdle of explaining sophisticated analytics to wealth distribution channels to get foot in door
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