Seeking Alpha, the New York-based investment research company, will continue to evaluate providers of proprietary stock data as potential M&A targets, said David Jackson, founder and vice president of product.
Yesterday, Seeking Alpha acquired financial data and analytics platform CressCap for an undisclosed amount. CressCap’s CEO, Steven Cress, will join Seeking Alpha as the head of quant strategies.
The interest in financial data comes as Seeking Alpha, known for crowdsourcing qualitative commentary on US stocks, has started building data analytics and visualization capabilities over the last few months, Jackson said. Meanwhile, CressCap finished developing its analytics software and reached out to Seeking Alpha last year as it was looking for distribution channels, he said.
CressCap was founded in 2017 as an investment research firm. It collects data from public companies’ financial filings and produces analysis reports based on quantitative research. It used a subscription model targeting institutional investors, Cress said.
Seeking Alpha targets analysts who look at stock fundamentals, as opposed to active traders. For this reason, its strategy is to show readers how underlying data can lead to a conclusion, instead of simply the result and conducting quantitative analysis on the back end, he explained.
Seeking Alpha funded the CressCap deal with its own cash and equity, Jackson said. Going forward, it would prefer other relatively small deals that it can fund internally, he said.
Jackson founded Seeking Alpha in 2004 after five years at Morgan Stanley as a technology research analyst. It has raised three funding rounds. The most recent was in 2009, Jackson said. Total capital raised was USD 7m, according to Crunchbase. Its equity investors include Benchmark, Accel and DAG Ventures.
Seeking Alpha has received strong interest from investors but is not actively pursuing external capital as it is very profitable, Jackson said. Advertising and subscription fees are the major revenue sources, he noted. While some content is free, the company offers three paid products: Seeking Alpha Essential for individual investors, Seeking Alpha Pro for institutional investors, and Seeking Alpha Marketplace for access to individual analyst’s research reports.
It is in the same market as financial news providers, such as the Financial Times, Bloomberg.com, and the Wall Street Journal, as well as investment research aggregators such as FactSet and TheMarkets.com, Jackson noted. TheMarkets.com was acquired by S&P Global-owned [NYSE:SPGI] Capital IQ in 2010 for an undisclosed amount.
Once it’s ready to exit, in addition to financial media players, Seeking Alpha could attract brokerages such as E*Trade [NASDAQ: ETFC] or Fidelity, because it serves retail investors, said a sector banker. A brokerage could add Seeking Alpha’s content and data tools to consumer-facing products, to help customers make investment decisions, he explained.
Jackson would not comment on an exit timeline, whether through an IPO or an acquisition.
Seeking Alpha has about 170 employees. Eli Hoffmann was promoted to CEO in 2015 from the position of vice president of content, according to its website.
by Yizhu Wang