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. A 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. The company raised $2.14 million in funding earlier this year.
If you’re in this business of selling data, you can’t just sell data that’s easily available. Value is created around one or more of these four categories (1)
- Scarcity: How easily available is this data? Can anyone visit a website and download it? Obviously, the more difficult it is to find, the more valuable the data is. Because CargoMetrics is in stealth mode, it’s difficult to know all of the places the company sources its data, but one can assume it requires more than a simple google search.
- Granularity: When selling data, the more granular, the better. For instance, detail-level data is always better than aggregate-level. Detail-level might include who your users are, time of transactions, location, etc.
- Time: There 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.
- Structure: If you can’t parse the data for useful insights, it isn’t valuable. This is the challenge that many companies face when looking at what to do with their unstructured data. If you’re able to clean the data and present it in a manner that allow
Collecting and structuring data is only part of the game. Finding someone who’s willing to pay you for it is the other part. Based on the little we know about CargoMetrics, they appear to be selling their data to hedgefunds. Typically when a company has data to sell, they can take two approaches. They can sell their data directly or go through a data broker. Companies like Acxiom purchase a wide range of data on individuals, package it up, and sell it advertisers, retailers, and financial institutions.