US tech startup partners with Sygnia

1. Tell us about Kensho – its history and systems.

Kensho was founded by Daniel Nadler, a PhD economist from Harvard, in 2013. Nadler had previously worked with the Federal Reserve on an academic appointment during the financial crisis and it was during his tenure there that he came to realise how hard and time consuming it was to gather sufficient data to properly analyse the relationships between world, economic and market events, examine historical precedents and to iterate through different hypotheses – all crucial capabilities during periods of high stress in the markets.

With this insight, Nadler co-founded Kensho in 2013 with the express mission of bringing cutting edge analytics and vast compute power – once the preserve of a few very well funded hedge funds – into the mainstream. The Kensho analytics and machine-learning platform uniquely combines the world’s largest world event database maintained in the civilian arena with market and economic data into a single, integrated environment so that investment professionals can quickly test hypotheses and understand the effects of news and economic events on assets and vice versa.

The Financial Products division produces indices from which our clients can underpin financial products, such as (unit trusts or exchange-traded funds), or benchmark their own performance as they invest in the economies of the future. The Kensho New Economies: 21st Century Sectors are the first comprehensive family of indices we have released publicly. Leveraging Kensho’s proprietary natural language processing (NLP) platform, millions of pages of regulatory filings and other public information are analyzed to identify the companies involved in each area of interest. Proprietary algorithms also determine the extent of each company’s involvement.

2. Tell us about the people behind Kensho.

We are a diverse and spirited group of engineers and scientists who are accomplished analytical thinkers and passionate problem solvers. Together, our multi-talented team includes one of the seven members of the original Apple iPhone engineering team, PhD physicists, Quantum Computing PhDs (including the creator of the world’s first solid-state two-bit quantum processor with electron spins), the co-founder of Nowcasting at Google, one of the founding leaders of the Google Books team and a senior leader of the Google Knowledge Graph team, and one of the youngest-ever entrants to Harvard College (age 15).

In addition, senior team members are drawn from blue chip financial institutions such as Goldman Sachs, Morgan Stanley, Credit Suisse, JPMorgan, and BlackRock.

3. There is virtually no venture capital funding available in South Africa. Can you tell us how US companies secure VC funding and what it is like to have VC investors in your business?

The US has a deep and diverse set of investors willing to fund new companies through a variety of vehicles, all the way from crowdfunding and angel investors through VCs and strategic investors to large private equity investors and the deepest public markets in the world. That gives entrepreneurs a great set of choices as to how they fund their businesses, and each funding source has its own characteristics and trade-offs for a business.

4. How did you come up with the concept of Kensho New Economy indices?

It became clear to us that the standard industry classification schemes used today cannot effectively capture the industries most likely to power economic growth in the 21st century, and especially the dynamic nature and degree of interconnectedness that are the hallmarks of the new economy. Additionally, existing indices and listed products only touch on very small portions of the New Economy, such as Cyber Security. We believe that we have identified a large gap in the current sector worldview. With that in mind, we set out to create a family of indices that would be the most comprehensive and objective view of all the industries driving the Fourth Industrial Revolution now and in the future. These not only identify the leading companies in each industry, they also capture the entire ecosystems supporting them; essential for fully understanding where the economic impact and benefits lie.

5. Can you tell us about your partnership with CNBC?

NBC Universal, CNBC’s parent, is a strategic investor and partner and we continue to work together to bring the power of advanced analytics and machine learning to a broader audience. CNBC uses Kensho extensively for on-air analytics, which can be easily seen multiple times a day when the Kensho Stats Box and other financial information is presented and powered by Kensho. CNBC has made it a point to stay on the cutting edge of technology, and they have shown to be highly receptive to using the latest in agile and intelligent research and analytics tools and software. In addition, they frequently feature segments on the New Economy Indices and how they mesh with future technologies.

6. Why was partnering with Sygnia in South Africa an attractive proposition from Kensho’s perspective?

Sygnia has shown itself to be a disruptive force within the South African financial services market, in much the same way that Kensho has been to the financial industry in the US. They have a history of being innovative and aggressive in entering new channels and launching new products. The Kensho New Economies not only represent the drivers of economic growth in the 21st Century, but are also sophisticated mechanisms with which investors can very precisely capture that exposure. Sygnia immediately understood the opportunity that the New Economies represent. In partnering with them, we are confident that we are working with an organisation that can maximise the opportunity for investors to gain exposure to the New Economies in the South African market.

7. The Sygnia 4th Industrial Revolution Global Equity fund is the first fund of its kind in South Africa – is there anything like it in the USA that you are aware of?

Not yet, which is a true testament to the agility and vision of Sygnia. There are a very small number of funds that capture small portions of what constitutes the New Economies; however, Kensho is the only firm that has comprehensively captured the full extent of the Fourth Industrial Revolution. A number of financial institutions have licensed indices from us so that they can reference them in their structured notes or derivative products. We are actively working with partners in the US to ensure investors here have a similar opportunity to invest in the New Economies.

Kensho is not an investment adviser and makes no representation or recommendation regarding investment in any fund or investment vehicle. Please read important disclaimers.