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Capital IQ Adds Alternative Research From FirstRain
Standard & Poor’s subsidiary Capital IQ today announced an alliance with FirstRain, a Foster City, Calif.-based provider of Internet search technology. Under the agreement, Capital IQ clients--hedge funds, investment banks and private equity firms--will have access to alternative research from FirstRain.
Randall Winn, executive managing director of New York-based Capital IQ, said that its customers will be able to “view relevant blog posts and aggregated news on specific companies.” Capital IQ, which offers Web-based financial data and analysis tools, including information about public and private companies around the world, will add “qualitative information from alternative news sources, through FirstRain, to complement our fact-based backbone,” said Winn.
Penny Herscher, president and CEO of FirstRain, called 2008 “the year that Web content becomes essential. I don’t think it’s a question of whether the other major financial platforms--Reuters, Thomson, Bloomberg--do it, but how fast.”
Previously, a fund manager client of Capital IQ seeking information on Microsoft, for example, would see a profile of the company that included the balance sheet, income statement and hundreds of other data points, according to Winn. With feeds from FirstRain, that client can also access news sourced from the open Web.
Once Capital IQ decided to link with FirstRain--other Internet research companies were considered--it took about six months to integrate the technology, noted Winn. “Investment professionals are very information savvy, and many of our clients expressed interest in accessing this type of information within CapIQ,” he added.
FirstRain’s customizable software uses pattern detection to find information on the Internet that customers might otherwise have missed, then distills, analyzes, aggregates and presents the data. “It’s an intractable problem to try and find that information by searching the Web on one’s own,” said Herscher.
While the partnership allows Capital IQ to expand its services, it gives FirstRain access to a sizable customer base--over 2,200 financial firms use Capital IQ products. FirstRain currently has more than 100 firms using its technology, including ING Investment Management, Lehman Brothers, State Street Corp. and Tudor Investment Corp.
“The trend is offering up more than just static information, more than basic news,” said Sean O’Dowd, senior analyst at Framingham, Mass.-based Financial Insights. He characterizes the arrangement as “putting information around content--that content being the Internet. It’s a great move by CapIQ and a huge deal for FirstRain.”
The buy side wants “top-level data that can be culled from the Web in products like this partnership portends,” said Thomas Hutchinson, SVP and analyst for Integrity Research Associates in New York, which estimates that alternative research will reach $2.5 billion in five years, making it the fastest-growing segment of the investment research market.
In November, Dow Jones agreed to distribute its news feed on the InfoNgen platform--owned by New York-based Instant Information--which automatically monitors and tags content from more than 15,000 sources, including e-mail, blogs and search engines. Earlier last year, Reuters acquired ClearForest, an Israel-based supplier of technology that analyzes unstructured data from news feeds, the Internet and other sources.
Goldman Sachs last year launched Hudson Street Services, which offers third-party alternative research to its institutional clients through distribution agreements with technology providers. One of the platform’s ten vendors--the deals include minority investments from Goldman--is New Brunswick, N.J.-based Connotate Technologies, a provider of intelligent agent technology for searching and extracting data from the Internet.
“We are in the early days of all this,” noted O’Dowd. “The early winners are those companies that are very focused and make a burdensome activity more efficient, while offering up results to spur additional thought.”
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