Information overload is endemic to the financial industry, “particularly for buy-side equity analysts across hedge funds, private equity, corporate development, and more,” according to an update shared by Unusual Ventures.
The VC firm also mentioned in a blog post that it can be “daunting to conduct comprehensive research quickly and formulate differentiated hypotheses on a new company or industry.”
As noted in the update, there are more than 1 million finance professionals globally “who spend countless hours researching and formulating perspectives in order to optimize returns and find any advantage in a competitive market.”
As explained in the announcement, “to overcome this painful and time-consuming process, we sought a team that understands the workflows of financial analysts and possesses a strong technical resume in AI and LLMs.”
When seeking a category “leader” in this space, they look for founding teams that have unique product insights “based on first-hand experience and strong technical backgrounds that can move quickly in an evolving space to secure distribution and market share.”
They claim to have “found all of the above and more in Portrait Analytics and are [pleased] to announce that Unusual Ventures is leading their $7m seed round.”
Portrait Co-founder and CEO David Plon thoroughly “understands the workflows of a hedge fund analyst, having worked as a buy-side analyst for a decade at some of the top hedge funds in the world including Baupost and Slate Path Capital.”
Portrait’s engineering talent is “equally as skilled, with Co-founder Connell Gough working as a full-stack software engineer at EquipmentShare and other senior AI/ML talent joining from Bloomberg, Amazon Alexa, and Twitter.”
Portrait’s AI-powered research platform “will 10x the speed at which investment analysts and intelligence professionals across professions will discover and become experts on companies.”
Portrait leverages AI models “to accelerate the speed of research by answering challenging questions and producing impactful insights for its users.”
Portrait is not just “a simple LLM that sits on top of SEC filings and can do a quick search for information.” Rather, Portrait is powered “by a system of models that have been engineered to effectively think, write, and analyze like a well-trained analyst on an investment team.”
Active investment managers and groups “spend more than $30bn per year for data and research services and will spend almost anything to get any type of investment advantage.”
Financial research is “a multibillion-dollar industry that spans across many sectors, including hedge funds, asset management, private equity, corporate development, and broader company research.”
Although there have been billion-dollar companies built in this space that target the research industry, there “are still numerous inefficiencies that exist in this space that have yet to be addressed.”
After speaking with a variety of individuals across the investment spectrum, many of the common workflow pain points “include the slow aggregation of information, inaccuracies in data synthesis, the challenges that occur with presenting complex information, and the inefficiencies of comparing datasets across companies.”
Given the rise of ChatGPT4 and the size of the financial research sector, there “has been significant activity in the investment research category as a whole.”
Bloomberg released its BloombergGPT paper in March 2023 and Alphasense just closed a fresh round of funding at a $2.4bn valuation.
They believe this only “adds momentum to the space and there are strong opportunities for new entrants to build market share with differentiated products around useability, depth, and flexibility.”
With Portrait Analytics, investment analysts can go “beyond simple synthesization solutions to identify new investment trends/ideas and improve their workflows without the loss of accuracy or credibility.”
Portrait Analytics’ mission is “to accelerate and deepen powerful investment research through building a generative AI research assistant for every investor.”
The company was “co-founded by a chronically time-strapped buy-side investor at The Baupost Group who sought a better way to efficiently consume data from filings, transcripts, and research.”
With this goal in mind, Portrait leverages machine learning applications “to accelerate and deepen powerful investment research.”
Portrait Analytics is “backed by Unusual Ventures, .406 Ventures, and partners at leading global hedge funds.”