Interview: Armando Gonzalez, CEO, RavenPack
Your press release following the new investment made in RP mentioned growth in Asia. Could you tell us a bit more detail about which markets and product areas will be addressed?
We see APAC as a high growth market for our core product, comprised of news and social media analytics for systematic investing and trading, but also for new innovative solutions in ESG and Fixed Income. We are also seeing demand from firms looking to license our Natural Language Processing (NLP) technology to automate business processes, improve risk and compliance workflows, and to identify trends and themes arising from their own content.
We are also adding more and more regional sources and supporting new languages in our NLP stack, bringing life to new and interesting data products specifically catering to the APAC market.
RP’s growth has been spectacular, but now with well over 130 employees and plans to double that over the next 12 months, as CEO what would you say are your main priorities to achieve your goals?
We are +130 team members across our New York and Marbella (Spain) offices. We were only 40 “RavenPackers” two years ago and every department, from Development to Operations, has grown dramatically. What is really exciting is that all this growth has been supported by revenues, and we want to keep it that way. Therefore, we need to ensure we continue developing cutting edge data products and keep pushing the state of the art with ongoing research and development efforts. We also have VC backers whose funding is fueling many of these innovation projects - keeping us ahead of the game.
ESG has been one of the areas of most interest for funds over the last months. Do you see potential for this to be a direct source of alpha rather than just a restriction / filter?
Yes. We have conducted our own research that demonstrates how ESG can be a potential source of alpha for equity investors. Our latest ESG study shows how sentiment analysis enhances stock screening, leading to better performance and downside risk mitigation. For example, stocks with a high ESG rating tend to experience lower drawdowns during periods of negative news around ESG issues, and, more importantly, when they do sell-off they usually overshoot temporarily before making a recovery. This suggests that by timing stock purchases until after the release of negative environmental news caused a temporary pull-back in price, we can further enhance returns.
Is there a developing new topic that will be the next big thing?
Besides more automation and alternative data use in Fixed Income and ESG, I think “monetization of your content” is the next big thing for companies. For example, most financial institutions are sitting in overwhelming amounts of research reports, emails, instant messages, and other documents that arguably contain valuable and actionable information. Having the ability to extra the information you need, when you need it, and access to the right tools to squeeze value from their own oceans of information is the next big thing for financial institutions.
As focus moves strongly to getting systematic strategies into production, what’s your advice to funds to help them to ‘go live’ quickly and more often?
Start with well-proven use cases leveraging proven alternative data sets like sentiment, which have lots of research and multi-asset class applications. This is one of the datasets with the longest digital history (at least 20 years), which makes it ideal for backtesting purposes. Because the data is so deep and rich, there are many ways of slicing and dicing it, reducing the chances of signals getting easily arbitraged away.
Predicting market values appears to be one of the most challenging use cases for AI. As RP seek to expand outside financial services does this give you an advantage over existing suppliers in those sectors?
Being one of the first alternative data providers, founded over 16 years ago, we had a head start in developing analytics and expertise. Our technology is mature and we have many projects going on that further push the boundaries of what is possible in automated text and unstructured content analysis. We built everything with low latency at its core, making our engine the fastest “text processor” in the world. These fundamental qualities and growing demand from corporate customers outside of finance certainly gives us an edge over suppliers, and I would argue, even above some of the Goliaths in our space.
What keeps you awake at night?
My young son not wanting to sleep in his bed at night :)
You must travel a great deal - what tips do you have for a happy but busy travelling life?
Drink a lot of tequila before you go to bed...haha - kidding aside, wake up early, walk to every meeting if possible, and always know WHY you are doing what you do.
RavenPack are Gold Sponsors at the upcoming AIDST event in March. To learn more, go to: https://www.aidatatrading.com/sponsors/ravenpack-1