A startup which aims to help analysts and fund managers cope with dreaded regulatory changes has grabbed $38m (£27m) of funding Thursday, from a cohort of big banks led by Goldman Sachs.
Visible Alpha was launched in the run up to the second Markets in Financial Instruments Directive (Mifid II), which is expected to radically reform the way that fund managers, investment banks and broker analysts operate.
Investment banks especially have been wondering how to make their research stand out and sustainable to produce, as Mifid’s rule that fund managers must now pay for research – rather than receiving it for free as an incentive to trade with the investment bank or broker – has made many firms cut down on their research expenditure.
The answer, according to banks including Goldman Sachs, Santander, BNP Paribas, Macquarie Group, Royal Bank of Canada and Wells Fargo, is to plough investment into tech firms such as Visible Alpha which will solve the issue for them.
Visible Alpha, which was founded by Bank of America, Citi, Jefferies, Morgan Stanley and UBS, uses technology such as machine learning to analyse and bring together data from analysts and offer tools to fund managers to help interpret it.
Darren Cohen, partner and head of strategic investments at Goldman Sachs, said the business was helping firms on both sides of the research table “solve their most pressing challenges related to research dissemination, entitlements, procurement and valuation”.
A number of tech firms have sprung up in reaction to Mifid II’s shake-up, while others have been given a new lease of life.
Software companies Rsrchxchange and Commcise partnered a month before Mifid II’s January implementation date to create a research aggregation platform, while Quant Insight launched to provide a data- and pattern-driven macro alternative to research.