Introduction
The alternative investment management community has and is going through a radical transition in the way they research and choose their investments; a transition which will most certainly lead to winners and losers, one I am a part of. Below I will discuss the traditional process in respect to both hedge funds and venture capital firms and the implications of evolving into data-driven investment managers.
What is Alternative Data?
Simply put, data which cannot be found on traditional financial statements and which is leveraged in modeling the key drivers of any given business and/or providing insights into an endless list of factors that impact the performance of a company. Examples of this can be credit card transactions, email receipts, social media, app usage, open-source, geospatial, etc. The type of data and its usage ultimately depend on the business being researched, i.e. consumer credit card data would not be a good candidate for B2B insights.