{"id":2792,"date":"2015-11-22T23:30:28","date_gmt":"2015-11-23T04:30:28","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/data-and-hedge-funds\/"},"modified":"2015-11-22T23:30:28","modified_gmt":"2015-11-23T04:30:28","slug":"data-and-hedge-funds","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/data-and-hedge-funds\/","title":{"rendered":"Data and Hedge Funds"},"content":{"rendered":"

Hedge funds have always relied on information to gain an edge in investing, but they are increasingly looking for new sources of data to stay one step ahead of the competition. \u00a0A Boston-based startup called CargoMetrics is taking advantage of this trend by collecting data on commodity movements via ships and in turn, selling that data to hedge funds. \u00a0The company raised $2.14 million in funding earlier this year.<\/p>\n

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Value Creation<\/strong><\/p>\n

If you’re in this business of selling data, you can’t just sell data that’s easily available. \u00a0Value is created around one or more of these four\u00a0categories (1)<\/p>\n

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  1. Scarcity<\/span>: \u00a0How easily available is this data? \u00a0Can anyone visit a website and download it? \u00a0Obviously, the more difficult it is to find, the more valuable the data is. \u00a0Because CargoMetrics is in stealth mode, it’s difficult to know all of the places the company\u00a0sources its\u00a0data, but one can assume it requires more than a simple google search.<\/li>\n
  2. Granularity<\/span>: When selling data, the more granular, the better. \u00a0For instance, detail-level data is always better than aggregate-level. \u00a0Detail-level might include who your users are, time of transactions, location, etc.<\/li>\n
  3. Time:<\/span>\u00a0There are two aspects of time – the first is how far back in history the data goes, the second is how quickly it takes to receive it.<\/li>\n
  4. Structure:<\/span>\u00a0 If you can’t parse the data for useful insights, it isn’t valuable. \u00a0This is the challenge that many companies face when looking at what to do with their unstructured data. \u00a0If you’re able to clean the data and present it in a manner that allow<\/li>\n<\/ol>\n

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    Value Capture<\/strong><\/p>\n

    Collecting and structuring data is only part of the game. \u00a0Finding someone who’s willing to pay you for it is the other part. \u00a0Based on the little we know about CargoMetrics, they appear to be selling their data to hedgefunds. \u00a0Typically when a company has data to sell, they can take two approaches. \u00a0They can sell their data directly or go through a data broker. \u00a0Companies like Acxiom purchase a wide range of data on individuals, package it up, and sell it advertisers, retailers, and financial institutions.<\/p>\n

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