Traveloka is almost 100% back in business against all odds, plus the Bangladeshi startup that raised the largest series A round in the country.
6
The round is Sequoia Capital India and Flourish Ventures’ first investment in Bangladesh.
8
Singapore is a "natural geographical expansion" for the Malaysian startup, which has cross-borders activities and clients with regional offices.
2
BAI claims that it is the largest series A round in fitness tech startup globally.
8
Tjetak says it produces 5 million packages per month on average, serving clients in industries such as F&B, ecommerce, and pharmaceuticals.
BasisAI looks to raise a series A round in the next 12 months.
CredoLab seeks to expand across Asia, Latin America, and Africa while focusing on Southeast Asia.
Ethical living startup CoGo hopes to raise more than £20 million ($26 million) from impact investment funds as part of an ongoing Series A round, CEO Ben Gleisner told Business Insider. The app, which uses open banking tech to nudge consumers to do things like lower their carbon footprint and spend on businesses that pay the living wage, has raised over £4 million ($5.2 million) since it was founded in 2016. It plans to use the funds to grow its user base from around 75,000 to half a million by March 2021, and to launch into new markets in North America, Australia, and Northern Europe.  Here's an exclusive look at the pitch deck it's used to bring new investors on board. Visit Business Insider's homepage for more stories. London-based ethical living startup CoGo has closed more than £4 million ($5.2 million) in funding since it launched in 2016. Now, it is in the process of raising a Series A round, which it says will bring in upwards of £20 million ($26 million). The free CoGo app uses open banking technology to nudge consumers into make ethical spending decisions. Its two main features are a "living wage wallet," which tells users how much of their money is spent on businesses that pay the living wage, and a carbon footprint tracker. It also asks users what they value — for example, vegan, fair trade, or cruelty free products — and nudges them to spend on business that align with those values. Most of the £4 million ($5.2 million) the startup has raised so far have come from angel investors. CEO Ben Gleisner says that 75% of the most recent funding was reinvestment from existing investors. The ongoing Series A round will bring in new funding from impact investors, and will help CoGo to launch into new markets in North America, Australia, and Northern Europe.  Tech-for-good startups like CoGo have benefited from the surge in impact investing over recent years, says Gleisner. "There's this growth of funds that are looking for companies that can deliver financial return, as well as sort of social and environmental impact," he says. "While COVID was a bit of a shock ... there's a massive build-back-better narrative now." The CoGo app currently has around 75,000 users across the UK and New Zealand, and ambitious plans to grow. "We've got goals of half a million [users] by the end of the financial year," says Gleisner. "Ultimately, we want 100 million people within three years using our app." With a larger consumer base, CoGo will have an extensive dataset that it can use to sell insights to businesses, says Gleisner, adding that a revenue model based on advertising would undermine the startup's ethics-driven mission.  "[With 100 million users], you could definitely drive businesses to change what they do," he says. "The insights we think will be hugely important, like if you don't know the insights of the CoGo consumers then you're losing some really important valuable customer base." The startup also recently announced partnerships with Westpac New Zealand and one of the 'Big Four' banks in the UK, which it hopes will help to raise its profile and drive consumer growth.  Here's an exclusive look at the pitch deck it's used to bring new investors on board so far. CoGo CoGo CoGo CoGo CoGo CoGo CoGo CoGo CoGo CoGo CoGo CoGo CoGo CoGo CoGo CoGo CoGo CoGo CoGo CoGo
Crossbeam, a startup that helps simplify the process of sharing data between companies, recently scored $25 million in Series B funding in a round that included Redpoint Ventures and FirstMark Capital. Business Insider has obtained an exclusive look at the pitch deck Crossbeam used to convince investors for its $12.5 million Series A round. Crossbeam's platform takes data from the disparate programs used by companies to track customer information and combines them to create a single, searchable set. Co-founder Bob Moore said he was inspired to start the company by his past at SaaS companies, where even seemingly simple acts of data-sharing between companies were stymied by mismatched systems. Visit Business Insider's homepage for more stories. Business partnerships between companies have always been complicated. Now the physical isolation imposed by the COVID-19 pandemic has made it harder. "How can you do an effective job of building a partner ecosystem when you can't high five, can't slap people on the backs anymore and shake hands?" Bob Moore, co-founder of partnership platform Crossbeam, told Business Insider. The pandemic helped accelerated interest in Crossbeam's simplifying platform to the point where investors started approaching Moore less than a year after the company's previous round. In early August, Redpoint Ventures led a $25 million Series B round for the company, joined by FirstMark Capital, Okta Ventures, Slack Fund, Uncork Capital and Partnership Leaders. You can check out the redacted pitch deck Crossbeam used to bring investors on for its $12.5 million Series A round below. "It's a little bit of a surprisingly rabid funding market right now," said FirstMark partner Matt Turck, who joined the round after Moore told him he'd been approached by other investors. "Five months ago everybody thought the market was going to slow down considerably. Then lo and behold, fast forward to today, it's actually more intense than it's probably ever been." Moore said the extra funds would go to expanding the company's free version of its services to help pull more customers in. "We think that's the smartest way to go about building a really valuable network where people are active and their use will grow over time," Moore said. "We're not rushing into trying to extract dollars from them the first two weeks after they sign." When companies partner with each other, they frequently need to figure out what customers they may have in common. But the way companies keep track of their customers varies, making it hard to easily and securely compare data to find any overlap. Crossbeam works with programs commonly used to track customer data, like Stripe and Salesforce, to create a common data set both companies in a partnership can search through. Moore said he was inspired to found Crossbeam by his past at SaaS companies. "It was shockingly hard to answer what seemed like really simple questions anytime we were collaborating with another company," Moore said. "So if we had a partner and we just wanted to know 'how many customers do we have in common?' or we wanted to know 'are my sales reps currently selling to any of the same companies that your sales reps are selling to?'...It was very, very difficult to answer this question." The company also sells itself as a sort of "LinkedIn" for partnerships. Once a company has uploaded its data to Crossbeam's platform, it can easily integrate its data with any company already on the platform. Take a look at the redacted deck Crossbeam used to score $12.5 million in Series A funding.
Enterprise automation startup JIFFY.ai raised $18 million in Series A funding led by Nexus Venture Partners in June. In the first half of 2020, its customer base has doubled as the pandemic forced companies to streamline their operations via automation. JIFFY.ai competes with giants UiPath and Blue Prism in the growing market for robotic process automation (RPA) — almost all companies will use RPA within the next five years, according to Deloitte. Find more pitch decks in our searchable PITCH DECK LIBRARY here. Enterprise automation startup JIFFY.ai raised an $18 million Series A round led by Nexus Venture Partners in June. JIFFY.ai is an AI-first platform focusing on the highly regulated fintech industry. Its tech draws on robotic process automation (RPA), machine learning, and artificial intelligence to simplify process automation and app development for companies.  CEO Babu Sivadasan says the startup's client base has grown 200% in the first half of 2020, as an increasing number of companies look to streamline their operations. "[In] the second quarter, actually a lot of organizations started seriously looking at automation," said Sivadasan. "Because the fundamental notion that you're going to have people working in office operating your infrastructure, operating your applications, that has been challenged." Since it was founded in 2018, JIFFY.ai has built a global team of 150 employees and over 30 clients. This includes Fortune 500 companies like Southwest Airlines, which use JIFFY.ai to automate a wide range of processes, from bookings to pilot timesheets. The US-based startup was co-founded by a team of 20, largely former founders and C-suite executives to disrupt the growing automation market. Almost all companies will use RPA within the next five years, according to a survey by Deloitte. Its majority stakeholder is the non-profit organization Paanini Foundation, which partners with the startup to retrain workers whose jobs are displaced by automation.  "We are also concerned about the potential impact of automation to existing jobs ... so we wanted to pursue build a company with a strong sense of deep social responsibility and moral character," says Sivadasan. "Being ruthless about innovation ... but at the same time being compassionate." JIFFY.ai competes with a number of other tech giants in the RPA space like $10.2 billion UiPath, which plans to go public in early 2021, and UK-based market leader Blue Prism. "We have had good success competing against the big players. We've just been selected by, for example, AirAsia in Malaysia," says Sivadasan. "Where we have seen success in competition is when a decision is being made based on the merits of the product." Check out the pitch deck it used to bring investors on board:
Alexander Liegl is the CEO at Layer1, a bitcoin-mining startup that raised $50 million in Series A funding from Peter Thiel and Shasta Ventures in 2019. Before Layer1, Liegl launched a startup, Apax Labs, that helped the Mexican government detect tax fraud. In 2018, Liegl pitched an idea for an activist hedge fund for cryptocurrencies to Jack Selby, a member of the PayPal mafia and the managing director of Thiel Capital.  Selby told Business Insider in an email that he forwards about 1 in every 10,000 deals to Peter Thiel, and Liegl's was among them. Selby said that Liegl was "one of the most innovative entrepreneurs working in the space." Liegl told Business Insider that, in their initial meeting in 2018 in Thiel's San Francisco office, Peter Thiel offered to invest in Layer1 immediately and canceled his next meeting so that the two could keep chatting. Visit Business Insider's homepage for more stories. When he was a Stanford student, Alexander Liegl hopped from economics to physics to computer science before he decided to double major in applied math and philosophy.  Liegl, who, like Peter Thiel, is originally from Germany, told Business Insider in an interview that he left his home country because he didn't want to be "boxed into a career at 18." In Germany as well as many other European countries, students must pick their majors and commit to a career before starting university, he explained. "I see myself as a fox, rather than a hedgehog," Liegl said. "I like chasing lots of little ideas, not one big one." Liegl's zig-zag intellectual path would later lead him to a fateful meeting with Thiel, the maverick billionaire investor,  and a $50 million investment in Liegl's current company, Layer1 — a mash-up of Bitcoin mining and power grid stabilization. But there were a few other experiments in between. By the time his sophomore year at Stanford rolled around, Liegl and a few classmates had co-founded a quantitative hedge fund, Bessel Capital. In 2017, after graduating, Liegl launched Apex Labs, a platform that helped the Mexican Tax Administration Service detect fraud. "We moved to Mexico City for 7 months and negotiated with the head of the Mexican Tax Administration Service and the treasury secretary," Liegl explained. "We had a revenue share with the Mexican government." But on the heels of Mexico's 2018 election, which saw leftist outsider Andrés Manuel López Obrador ascend to the Mexican presidency, Liegl had to switch gears. The election led to a historic shake-up in the Mexican government, Liegl explained. The previous head of the Mexican Tax Administration Service was ousted from office, and working with the agency became increasingly difficult, Liegl explained.  Liegl and his team saw the writing on the wall and jumped ship.  As the then-25-year-old entrepreneur started plotting out his next venture, he thought back to Bitcoin, a cryptocurrency that he had started mining casually back in 2012, when he could freely use Stanford's electricity. "It's an immature industry, so it's up for grabs," Liegl said of his 2018 interest in Bitcoin. Before he fully fleshed out the idea that would form the basis of Layer1, Liegl in 2018 pitched an idea for an activist hedge fund for cryptocurrencies to a prospective investor who connected him with Jack Selby, a founding member of PayPal and now a managing director of Thiel Capital, a San Francisco-based investment firm founded by Thiel. After telling Selby his personal story, Liegl said that the PayPal veteran offered to put him in touch with his colleague, Peter Thiel.  "I filter out about 10,000 deals for every one that I vouch for and send to Peter," Selby told Business Insider in an email, "so Layer1 clearing that bar is quite an accomplishment itself." Liegl said he wasn't expecting much out of the meeting. "The objective was just meet and greet," Liegl explained further, "not to invest." Two iconoclasts meet for the first time When Liegl finally met with Thiel in July 2018 in the billionaire's San Francisco office, the two bonded over their German roots and attending Stanford, where Thiel received his BA and JD. Together, the two traversed topics such as ambition, entrepreneurship, and how people think in Europe vs. the US, especially in Silicon Valley, Liegl said. Once Liegl got around to explaining his current project, he said that Thiel was "very optimistic on Bitcoin." "He was so involved that he offered to invest immediately and pushed back another meeting that he had afterwards so that we could just chat a little longer," Liegl added, acknowledging his own surprise.  Thiel's lawyer called the next day to confirm Thiel's investment in Layer1's Seed round.  Liegl had initially planned to use the Seed money to invest in cryptocurrencies like Grin, which "is designed to be a completely private and censorship-resistant transaction medium," per TechCrunch. But he later decided to reframe Bitcoin mining as a way to "solve systemic energy issues," where "the addressable market is in the trillions," the CEO said. His original idea eventually flourished into the current form of Layer1, where the 27-year-old entrepreneur now serves as CEO. At Layer1, Liegl and his team have developed a way to mine for Bitcoin in places with cheap electricity — an essential element because the complex computer-driven process to mint Bitcoin consumes a lot of power. The company created "boxes'' that carry out the mining. Layer1's model also involves coordinating with the utilities supplying the electricity in a way that the startup says can stabilize power grids. The company pays for the electricity it needs. But when the demand for power surges — as it does in hot climates when everyone is blasting the AC — Layer1's boxes stop mining Bitcoin and allow the freed-up power to flow into the grid and help meet the peak demand. Layer1 has developed a liquid cooling system that allows the Bitcoin-mining boxes to thrive in the climate of a place like west Texas, the location of Layer1's Bitcoin mining factory. West Texas is full of natural gas and wind, so the region offers some of the cheapest forms of the energy so essential to mining for cryptocurrencies. The startup sells the mined Bitcoin for US dollars so that it can reinvest the capital into the company's transcontinental operations. The two iconoclasts meet again But before Liegl could build his Bitcoin-mining boxes, he needed to raise additional capital. The CEO met with Thiel in his Los Angeles office in August 2019, when Liegl discussed his idea for a wind-powered Bitcoin mining factory in west Texas. Liegl's ambitious plans required him to buy land in west Texas, invest in hardware, and expand his team across the globe. And it seems that Thiel was excited about the prospect.  In October 2019, Layer1 announced that Thiel, along with Shasta Ventures, had invested $50 million into Liegl's Series A round, at a sky-high $200 million valuation, up from the $5-$6 million valuation that is typical of most Series A rounds. Already, Liegl has developed a global assembly process that spans a number of countries, including the US, Germany, China, Russia, Croatia, and South Korea.  "As an investor in Layer1," Selby said, "I truly believe that Alexander is one of the most innovative entrepreneurs working in the space. He is developing cutting-edge technology that will make energy assets significantly more profitable, as well as revamp legacy electric grids." "He's turning electricity into money," Selby added. Per Thiel Capital's internal media policy, Thiel was not available for a comment.SEE ALSO: This startup scored $10 million to build homes like Apple builds phones. Here's how it won over a Founders Fund VC and one of the country's top home construction companies Join the conversation about this story » NOW WATCH: Here's what it's like to travel during the coronavirus outbreak
Revenue for UK-based virtual fertility clinic Apricity surged 84% in the first half of 2020, compared with the previous year, despite it delaying all new rounds of IVF during lockdown. Apricity has delayed plans for a Series B round until 2021, but has received startup support from the French government because of the difficulties caused by COVID-19. Here's an exclusive look at the pitch deck it used to raise $7 million in Series A funding in June 2019. Visit Business Insider's homepage for more stories. UK-based virtual fertility clinic Apricity has seen revenue nearly double in the first half of 2020 compared to last year, despite scaling back its operations because of the pandemic. The startup, which runs fertility clinics with partners and has digital services such as a patient care app and 24/7 online support, delayed all in-vitro fertilization (IVF) rounds that were due to start during two months of lockdown. But revenue still grew from £90,000 ($118,000) in April to £184,000 ($241,000) in June — its best month ever. Revenue for the first half of 2020 was up 84% compared to the same period in 2019. The company decided to delay a Series B that was scheduled for the end of 2020 until Q2 2021 — its increased revenue along with COVID-related startup support from the French government have bolstered its finances. It raised a $7 million Series A round from AXA's startup studio Kamet Ventures in June 2019. Since then, three babies have been born and 15 more women are pregnant because of Apricity. "At the moment we have actually success rates which are higher than the ones in the market," said CEO Caroline Noublanche, adding that it was too early to publish concrete numbers.   Noublanche attributed part of the company's success to AI tech used in a fertility tracker, which tailors treatment for patients based on evidence from around the world. "It's still in research and development at this stage, but it actually brings a lot of value," Noublanche said. "It's really just the tip of the iceberg." It has extended a trial partnership it ran in the second half of 2019 with AXA PPP healthcare to offer fertility services to corporate clients. From 2021, it also hopes to expand its operations into other European markets. Plans to launch into countries like Spain, Germany, and France this year have been delayed because of the pandemic, and Noublanche said COVID-19 might impact which countries it launches into. Here's an exclusive look at the pitch deck it used to raise its Series A in 2019:Apricity Apricity Apricity Apricity Apricity Apricity Apricity Apricity Apricity Apricity Apricity Apricity Apricity Apricity Apricity Apricity Apricity Apricity Apricity Apricity
Bain Capital Ventures partners Ajay Agarwal and Aeref Hilaly said that the firm is looking to invest in early-stage founders who can "create markets" and "change the world." Part of the firm's strategy is leveraging the larger Bain Capital network to assist with things like early customer acquisition and preparations for the IPO roadshow. Here's a look at what the 2 VCs look for in early-stage founders.  Visit Business Insider's homepage for more stories. Bain Capital Ventures has built a reputation by backing later-stage growth investments in high-profile startups like SendGrid, which sold to Twilio for $3 billion, and DocuSign, which raised $629 million in an IPO in 2018. But Ajay Agarwal, a partner with Bain Capital Ventures, told Business Insider that a number of their early-stage investments are currently on the unicorn track, including Moveworks, Redis Labs, Attentive, and JustWorks. "We love meeting founders at the earliest stages," said Agarwal, who added that, while the firm is doubling down on Seed and Series A investments, it supports startups throughout their entire life cycle. Agarwal said that his firm's geographic reach is much broader than many Bay area venture firms' territories, which he says don't extend too far beyond the highways that surround Silicon Valley. When some investors go "east of the 101 or west of the 280 their networks get incredibly thin," Agarwal said. Bain Capital Ventures, which has over $5 billion in assets under management, is the venture investing division within Bain Capital, a global private investment firm with over $100 billion in assets under management across venture capital, private equity, public equity, credit, life sciences, real estate, and impact investing. Bain Capital has offices scattered across 4 continents. Bain touches "thousands of companies around the world," Agarwal added. So if IPOs are on the horizon, Agarwal said, the firm connects its portfolio companies with Bain colleagues who run the company's private equity fund, which is separate from the venture arm, so that the startup can prepare for the roadshow with Bain affiliates who are familiar with the process of taking a startup public. The VC also said that their founders can draw on expertise from Bain Capital colleagues from other sectors, especially life sciences and real estate. With all the expertise available inside Bain Capital's robust network, the venture capital wing can take risks on early-stage startups that may have great ideas, but need help shaping up to gain business credibility, the two VCs explained. "It's the great entrepreneur that leads you to the market or creates the market," Aaref Hilaly, Bain's newest partner and a former Sequoia partner, told Business Insider in an interview.  "We're looking for the outliers," Hilaly added. "We're looking for the incredibly bright misfits who have the imagination to dream about how the world could be as opposed to being constrained by how it is today." Hilaly said that the team looks to partner with startups when they have an idea, but an imperfect plan: "It's rough around the edges and pieces are missing." Some of the early-stage startups they invest in don't even have a website, Agarwal added.  "Forget 'build a company' and forget 'get to profitability,'" Hilaly said. Hilaly said that he places a great emphasis on the founding team and asks himself, "Is this a person that can create movement around the core of their company, that can really change the world?" This search for unicorn-track, early-stage diamonds in the rough is well-illustrated by Bain's investment in open-source database company Redis, which based its core, free product on a programming language — especially hot among  data scientists  — called SQL, or Structured Query Language. When Bain first participated in the Series A round for Redis, which now has the most downloaded SQL database in the world, Agarwal said that there was "tremendous download activity" and high "ratings and stars on GitHub." But there was a catch: No robust money-making business model had been developed by Redis, Agarwal said. Agarwal said that, back in 2013, he and his team were seeing a major shift from traditional SQL to NoSQL databases, so they invested in Redis and helped "to commercialize the success of the open-source product." They jumped in to assist the team with its product and market strategy, such as adding features to the commercial version of the database that users had to pay for.  In 2018, Redis masterminded a plan to take on Amazon Web Services, as Business Insider's Rosalie Chan previously reported.  "We helped them identify features that Amazon Web Services and other cloud vendors don't provide," Agarwal added, referring to the databases' ability to serve clients on premise in the client's offices, not only in distant third-party cloud servers. In addition to helping the Redis team create a "capital efficient, together velocity, go-to-market model," the Bain team offered assistance with finding early customers as well as making key early and executive hires, Agarwal VC said. Redis has received $146.6 million in total funding, and is on track to become a unicorn, Agarwal added, though he wouldn't reveal specifics.SEE ALSO: These two VCs were hobby Bitcoin miners a decade ago, and now they've raised $110 million for a second fund focused on cryptocurrencies and blockchain startups SEE ALSO: PITCH-DECK LIBRARY: Search through over 150 pitch decks that startups including Uber, Postmates, and Airbnb used to raise millions Join the conversation about this story » NOW WATCH: We tested a machine that brews beer at the push of a button
"Quantamental" is gaining hype on Wall Street. It's a type of investing strategy that tries to blend the best of quant funds and fundamental analysis. Bringing the two disciplines together is a feat in itself — hedge funds have tried and failed many times to get the culture and responsibilities just right. But both sides need each other, as fundamental analysts struggle to sort through massive amounts of data and quant models malfunction during never-before-seen market conditions brought on by the coronavirus. "I don't see my job as automating away humans," Man GLG's Paul Chambers told Business Insider. "I'd rather turn them into robo cops or Terminators, a machine-augmented human." Visit Business Insider's homepage for more stories. This story was originally published in May.  With a degree in physics and experience working as a scientist on airspace-weapon systems, Paul Chambers has the type of background many believe is the future of Wall Street. And while traditional portfolio managers might fear for their future at the sight of someone like Chambers, the reality couldn't be farther from the truth.  For Chambers, who heads up quantitative investment and research at $26.7 billion hedge fund Man GLG, it's all about bringing the two sides — man and machine — together. "I don't see my job as automating away humans," Chambers told Business Insider. "I'd rather turn them into robocops or Terminators, a machine-augmented human." Chambers and Man GLG aren't alone in their efforts. Across Wall Street, from highly quantitative shops like D.E. Shaw to well-known stockpickers like Steve Cohen, hedge funds are working to find the sweet spot between human and machine.  The push comes following a recognition in recent years that both sides could benefit from learning from each other. Commonly referred to as "quantamental," the strategy has picked up steam in recent years with funds on both sides of the aisle trying their hand at it.  Traditional managers have felt a growing pressure to use cutting-edge technology such as artificial intelligence and machine learning to digest the seemingly endless amount of data made available to Wall Street. Meanwhile, recent events, like March's market downturn driven by the coronavirus epidemic, have been a lesson for quants about the need to diversify their systematic models. "The two sides are becoming closer to one." said Chambers, who re-joined Man last year to "supercharge" the work already happening at the hedge fund leveraging quant data in the discretionary world. "Some quant performance has faded as easy trades have been arbed away, so it benefits them to learn what drives different types of companies to get the most from the data, and discretionary managers want to access the data that quants can unlock in order to remain competitive." No simple solution to bridging the gap Quantamental might be a topic du jour among hedge funds, but the increased buzz has hardly led to a standardized approach.  Take mutual-fund manager Strategic Global Advisors. Founded in 2005 as the brainchild of Gary Baierl, a former quant at Causeway Capital, and Cynthia Tusan, a portfolio manager at Wells Fargo, the firm attempted a quantamental approach from the get-go.  Brett Gallagher, SGA's president, told Business Insider the firm's strategy starts with a quantitative model built based on 15 factors. The suggested portfolio is then analyzed by fundamental analysts who have the option to kick stocks out — they typically reject 10-20% — but can't add any in.  That's followed by portfolio construction, which is then given a final look by the portfolio managers to make the last tweaks. Adjustments made by humans to the model are tracked and analyzed to recognize commonalities that could be plugged back into the model to improve it.  "I think having the fundamental overlay — we call them the gatekeepers — is really important to what we do," Gallagher said. "Even moreso in this time of craziness where there are a lot of things that may make the quantitative model look a little bit wonky on certain aspects. We have the analysts there who can scoot out the issues." PanAgora Asset Management, meanwhile, takes the opposite approach. George Mussalli, PanAgora's chief investment officer, told Business Insider the firm was unhappy taking a purely quantitative approach, finding it difficult to get differentiated results in what was quickly becoming a crowded field.  As a result, the fund adjusted its focus to discretionary idea generation that could lean on the quantitative techniques they'd already built up. At it's core, Mussalli said, it's about understanding the fundamental framework of companies and industries and then finding the necessary data to emulate that.  "What you end up with are very differentiated signals, very differentiated approach," he added. "You're using the power of quant and the techniques of breadth, portfolio construction, and risk management to build the best portfolio. But what you get is a portfolio that acts very differently than a lot of other portfolios." At Ray Dalio's Bridgewater, the largest hedge fund in the world with $160 billion in assets, the process is led by "human understanding," the firm's co-CIO Greg Jensen told Business Insider in an email. "Nothing in our process is purely 'quantitative' in the sense that it is based on statistical relationships or historical patterns that machines are discovering. Everything is grounded in human understanding, and every part of our process is inspectable to us, so that we can have the computer read our logic back to us in more or less plain English and ensure that our decisions are consistent with that understanding," Jensen wrote. Still, there are times that the machines can outweigh the people — Dalio himself was overruled in 2018 about a trade involving the US dollar, according to The Wall Street Journal.  Quantamental isn't without its own challenges There is no denying interest in pursuing quantamental strategies is rising, but the trend hasn't been adopted with open arms by everyone in the space.  Josh Pantony, CEO of Boosted.ai, a fintech that helps fundamental managers use quantitative tools, recounted a particularly difficult sales call. "The most brutal feedback I ever got from a prospective client was, 'Using your platform would be an admission of failure to my investors,'" he said.  Pantony's experience isn't an outlier. In many cases, fundamental managers view the usage of quantitative techniques as a threat to their job.  "I think it's always something that a true MBA from Harvard who is great at Excel and finance but doesn't know anything about coding worries about in the back of their mind," Daniel Goldberg, founder of advisory and consulting firm Alternative Data Analytics, told Business Insider. Culture needs to be a key consideration of bringing both sides together. Speaking on a webinar in April, Carson Boneck, the chief data officer at Balyasny Asset Management, said transparency between the two groups was critical. Having "translators," or employees that can work with both quants and portfolio managers, also helped the process. Balyasny ran into its own trouble with the strategy — the firm cut a 10-person team known as Synthesis after only a year because of poor performance in 2019. Coatue, the Tiger Cub manager known for fundamental stock-picking, rolled out a quant strategy a year ago — but has already returned outside capital after the pandemic overwhelmed its data-driven processes.  Industry sources echoed a similar sentiment, adding that quant teams brought into discretionary firms need to have clear responsibilities that show they are having a direct impact on the firm, as opposed to side projects that won't affect actual returns.  "Nobody likes to be put in a room and told to collaborate," Man GLG's Chambers said. "What you need to do is find a way for both sides to get something out of the process. ... Quants can't be seen as service providers." To be sure, quant-based shops have their own issues attempting quantamental strategies. For one, quants tend to take a build-over-buy approach, believing proprietary tech to be a key differentiator. But when it comes to the tools needed for quantamental strategies, they often don't have the same expertise and struggle with the process, Emmanuel Vallod, cofounder and CEO of SumUp Analytics, a natural-language-processing platform that analyzes text, told Business Insider. The issue of explaining models also tends to be a hangup for quant-focused firms, as they aren't accustomed to having to break down models to the level required by fundamental managers. "There is a need for explicability of the algorithm that is much, much, much higher than what systematic quants are usually requesting," Sylvain Forté, CEO of SESAMm, a provider of alternative-data analytic tools, told Business Insider "Reconciling the two worlds is not easy." Whichever side you approach the process from, nearly all agreed it takes time. It's not something that can be expected to work overnight. Constant tweaking of the system is required to find the perfect blend. Most firms can't resist pursuing quantamental strategies There will always be those who remain either purely fundamental or quantitative. Quants like Renaissance Technology or stock-pickers like Warren Buffet have been successful for too long to drastically change their ways now. But for the rest of the industry, a shift towards the middle seems more likely. "I don't think anyone can sit still," Andrew Fishman, president at Schonfeld Strategic Advisors, told Business Insider. The true definition of quantamental is probably lost forever as it has "one of those wildly generic Wall Street terms that is so amorphous that it doesn't mean much," according to Ryan Caldwell, chief investment officer and co-founder of Chiron Investment Management, a $1.8 billion manager that was bought by FS Investments at the end of last year.  But, Caldwell says, the evolution is necessary with alpha — returns generated beyond what the market churns out for everyone — becoming harder and harder to find.  Fundamental analysts have been pushed even further away from the research that was once the backbone of MBA programs across the country thanks to alternative data that can track supply chains more efficiently. No longer is it about "shaking info out faster than the guy sitting next to you," Caldwell says. "The fundamental part of this is understanding the macro environment with which we operate in," he added. And, during a global pandemic that has introduced never-before-seen volatility and record-low interest rates into the equation, quants can't rely on analyzing past situations to react to today because today is unprecedented.  "We would worry about any approach reliant on historical patterns or quantitative models based on historical data, whether combined with fundamental measures or not, as so much of the current environment and where we're likely headed isn't in the data, and instead requires a logical understanding of the economic machine," Bridgewater's Jensen wrote.  Former Goldman Sachs PM Mike Ho put an even finer point on the future. Quantamental, Ho wrote in a 2017 Medium post, will eventually be like "dating in the 7th grade": Everyone says they're doing it, even if they're not. Ho, who ran a firm called Quantavista for a time, is now at Steve Cohen's Point72. "We suspect quantamental may become an official word in the coming years, too. But, by then we'll probably all drop the 'quantamental' term and it will just be the way that most investment analysis is done," Ho wrote. "After all, why would you not want to combine quantitative and fundamental analysis?"SEE ALSO: Billionaire Steven Schonfeld poaches a top quant from Glenn Dubin's Engineers Gate to run a new fund SEE ALSO: The chief data officer at $6 billion hedge fund Balyasny explains how to merge quantitative and fundamental trading strategies — and the importance of 'translators' to bridge the gap SEE ALSO: 'Quantamental' investing is suddenly a buzzword in the hedge fund world, and we talked to the CEO of a fintech that just nabbed $8 million to help power the approach Join the conversation about this story » NOW WATCH: Why American sunscreens may not be protecting you as much as European sunscreens
More

Top