Active investors and fund managers are always on the lookout for investments that beat the benchmark. This requires them to arrive at alpha—a comprehensive strategy to surpass the market.
However, finding alpha is not easy, and there’s no one-size-fits-all approach. Successful investors and asset managers often combine multiple strategies, such as gauging chart patterns and tracking geopolitical affairs.
Asset managers also have to absorb several hundreds of hours of unstructured information annually: transcripts of analyst calls, tweets to gauge market sentiments, presentations, annual reports, conference calls, primary research, equity research reports, news articles, and management interviews. Needless to say, this is an exhausting process.
Investment analysts have to scrutinise shares in companies, considering factors such as past performance, margins, profits, shareholdings, sector size, and various other variables. Although all this is structured data, the analysis requires synthesising unstructured data.
“Although structured data like financial information is available through terminals like Bloomberg or FactSet, plenty of unstructured data analysis is required to bring everything together,” points out Krishna Chaitanya R Founder and CEO of Kshana.ai.
US- and Bengaluru-based Kshana.ai aims to simplify all this and more. It is an AI-driven asset management venture targeting asset and wealth management companies, fund managers, and analysts.
“The goal is to disrupt market-facing research at institutional investment platforms like hedge funds, mutual funds, family offices, PE and wealth management. Kshana uses LLMs (large language models) as an infrastructure layer to supercharge the scale of research for its customers,” says Chaitanya.
Natural language processing is used to extract insight from structured and unstructured sources.
Kshana has the capability to interact with company filings, earnings call transcripts, broker research, and various other publicly unstructured commercial data, efficiently extracting the information one may need. This eliminates the need for manual digging and streamlines the process of analysis and scrutiny for asset managers.
The startup has developed a platform with a built-in co-pilot tailored for asset managers. It ingests data and helps build investment strategies. The copilot allows users to interact with the product in various ways, including search, recommendations, personalised insights, and conversations to gain context-specific insights to familiarise themselves with any financial asset.
Founder background
Kshana marks the second venture for Chaitanya.
Prior to Kshana, he co-founded Euler Systems, a finance consultancy firm that utilises AI and statistical learning to help unicorn tech firms integrate search, recommendations, classification functions, and recommendation engines for their platforms.
Chaitanya has been a senior analyst at Sequence Capital, a New York-based hedge fund, where he led public market equity investments. He also has a background in product development.
His latest role was at Indonesia-based GoTo Group, where he contributed to the launch of a pay-later credit marketplace and other fintech products.
Growth and roadmap
Kshana has raised angel rounds of funding from senior AI practitioners like Himanshu Nautiyal, CPO at Fractal and Co-founder at Euler Systems; Mukesh Singh, CEO at Zop; Dr Rakesh Barve, Head of AI at nference; and product leaders from Twitter, HP and Google.
The startup plans to raise additional funding from institutions soon. It was part of TechSparks 2023, YourStory’s flagship tech startup event held last year in Bengaluru, and made it to YourStory’s Tech30 cohort as one of the 30 most promising Indian startups of 2023.
In October, the company onboarded Kiran Raj as the company’s engineering leader. Raj brings over ten years of experience in building software architecture for startups such as Yatra, Flipkart, and Moveworks.
Currently, Kshana has a minimum viable product in the making, which is being tried out by five global hedge funds. The startup aims to launch its product by the first quarter of calendar year 2024, targeting institutional researchers.
“We have a 2-3-year product roadmap already, and I think we have barely scratched the surface. There is an opportunity to build a large financial asset here,” says Chaitanya.
Going forward, Kshana is looking to partner with alternative data platforms, which sell web-crawled data, expert networks, consumer spending data, business performance data, satellite imagery, and social media trends to hedge funds.
Financial analytics market
The global financial analytics market is projected to grow from $8.27 billion in 2023 to $18.71 billion by 2030, at a CAGR of 11.4%, according to market research firm Fortune Business Insights.
Kshana will compete with the likes of New York-based AlphaSense, which creates searchable repositories of financial and industry data, and Chicago-based Tegus, which strives to speed up financial research.
Then there is Generative Alpha, a finance data co-pilot that can turn unstructured free-form long text into structured numerical tables and time series; Finchat.io which can answer queries and help with fundamental research, and Bloomberg, the financial data giant whose flagship product Terminal is used by banks and Wall Street hedge funds.
Edited by Swetha Kannan
