US start-up raises $10m for ‘finance Siri’; Investors offered virtual assistant to research global events

Investors turn to virtual ‘Warren’ tool for complex answers

January 22, 2014 4:08 pm

By Arash Massoudi in New York
Forecasting the market impact of a catastrophic US hurricane or an explosion in a Middle Eastern country usually requires serious time and brainpower.
Now a group of trading technology executives has teamed up with former Googleengineers and entrepreneurs to create a “virtual market assistant” – like Apple’s Siri, but for investors – that they claim will answer complex financial questions about global events instantaneously.
Kensho, a Cambridge, Massachusetts start-up, said on Wednesday its venture had secured $10m in seed financing from a group of investors including Google Ventures, Accel Partners, and Devonshire Investments, the private equity arm of asset manager Fidelity Investments.
The company said its assistant – named Warren to evoke the spirit of Warren Buffett – was already being tested by some asset managers and research teams.
The development highlights a growing interest among entrepreneurs and investors in taking technological advances widely adopted in consumer markets, such as the Siri virtual assistant on Apple’s iPhone, and applying them to financial services. Typically, such cutting-edge advantages have largely been the preserve of a small group of investors with large research and development teams.
Kensho said Warren could shorten investment research cycles from days to minutes and that it can currently answer 1m questions. That figure is set to rise to 100m distinct questions, and it will be able to respond to questions posed verbally by the end of the year, according to the company.
Daniel Nadler, Kensho chief executive, said: “A financial professional can watch the news, see a protest in Egypt and ask the system what happens to energy prices when there is civil unrest in the Middle East. Right now, what you would need to do is to go into a data provider, export spreadsheets, normalise them, create a time series and export that into a computer model.” The start-up is the first business run by Mr Nadler, 30, who is also a visiting scholar at the US Federal Reserve.
Warren relies on what Kensho says is one of the largest unstructured geopolitical and weather databases not run by the government. The company said it can answers questions such as: “What happens to Home Depot, home builder stocks, and cement company share prices following Category 4 hurricane landfalls in the continental US?”
Stanley Young, a former chief executive at Bloomberg Enterprise and an advisory board member at Kensho, said: “It is creating insight from data and allowing people to ask intelligent questions of the data.”
Kensho says Warren, which runs on a Nasdaq OMX cloud computing platform, will be rolled out to investors in the coming months at varying prices depending on the kind of investor.
The group has also appointed James Shinn, the former National Intelligence Officer for Asia at the CIA and the former assistant secretary for Asia in the US Department of Defense, to its advisory board.
David Jegen, managing director at Devonshire Investors, said: “Active asset management requires constant innovation to stay ahead, and we are just beginning to see how technology will transform existing approaches.”