Data Science Boom Drives FactSet to Launch Alt Data Marketplace

The first set of data partners include news sentiment provider Alexandria Technology, crowd-sourced earnings estimates vendor Estimize, satellite imagery provider Genscape, and ESG data vendor RepRisk, and officials say FactSet has already lined up the next batch of content providers to add to its platform.

“We’ve seen increased usage and demand for alternative data, starting among hedge funds and now among large asset managers,” says Rich Newman, SVP and global head of FactSet’s Content and Technology Solutions division. “The impetus for this has been the growth of data science, which has been driving more and more demand from our clients, who had requested—some even for a number of years—that we add these datasets to our platform.”

Newman says FactSet’s foray into alternative data began with its 2013 acquisition and integration of corporate supply chain ecosystem data vendor Revere Data. As demand for alternative data grew, FactSet debated collecting these datasets itself, before deciding it would be more beneficial to partner with existing third-party data vendors, giving it access to their data while giving them a mainstream channel to market and the weight of FactSet’s sales force behind them.

Over the past year, FactSet identified 300 potential data partners and looked at how it could vet the quality of their data and integrate these sources with its own data in a way that would be useful. “We spoke to about 200 and held meetings with around half of those,” Newman says.

This ability to link data is key to the offering’s value, so that someone looking at Estimize’s estimates can also easily look at FactSet’s proprietary estimates for the same company, says Estimize founder and CEO Leigh Drogen, adding that because FactSet has already done the heavy lifting of integrating the datasets, it becomes much easier for clients to begin using the data. Initially, FactSet is only carrying Estimize’s earnings per share data, though Drogen says his aim is to get all of Estimize’s data onto the FactSet platform.

“There are three advantages that we get from this relationship: First, some of these firms have limited resources to perform the integration work required to test new datasets. So it speeds up the time between being ‘interested’ to loading the data and putting it in front of quants. And that also decreases the sales cycle time,” he says. “In my opinion, anyone we make contact with via FactSet, we would have probably reached at some point in the next five years. So this doesn’t necessarily expand our total addressable market, but it does dramatically speed up the time it takes to reach them.”

Second, FactSet’s sales team becomes an extended sales function for Estimize and the other vendors, and third, the relationship makes it easier for clients to get access to alternative data through their existing FactSet datafeeds they’re already using, which also reduces the time required for them to start using it. In addition, all the legal work and finances are handled by FactSet, Drogen says.

Newman says the next use case for the alternative datasets will be a cloud-based research platform where clients can experiment with the data using programming languages favored by quantitative analysts, such as R, Matlab, and Python, and that FactSet may in future add some—though not necessarily all—of the alternative datasets made available as feeds to its workstation.

“We’re almost a way to ‘vet’ data before it goes into the workstation. But not everything will end up in the workstation. That will depend on demand. Incorporating data into the workstation is a bigger investment for us,” he says.