Alternative Data Market Revenue, Opportunity, Forecast 2024 - 2030

 Alternative Data Industry Overview

The global alternative data market size was valued at USD 7.20 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 50.6% from 2024 to 2030. The key drivers attributed to market expansion include the significant increase in the types of alternative information sources over the last decade. While web scraping and financial transactions are the most common sources, the emerging sources, including mobile devices, social media, satellites, sensors, IoT-enabled devices, and others, are gaining wider popularity. As such, the companies are actively expanding their offering by gathering information from all such sources.

The rising demand from hedge funds is expected to boost market growth significantly. More than half of hedge fund managers are now using it to gain a competitive edge by generating outperformance and supporting the risk management processes. More than 400 companies are engaged in selling alternative data to hedge funds, thereby contributing significantly to market revenue. Alternative data refers to the undiscovered which is not within the traditional sources such as SEC filings, financial statements, press releases, and management presentations. It is compiled from various sources such as e-commerce portals, public records, social media, financial transactions, web traffic, mobile devices, sensors, satellites, etc.

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Applying specific analytics to this compiled set yields additional insights that were previously unknown, and are used by investors to evaluate investment opportunities. As this new information is a crucial differentiator that contributes to the alpha (market outperformance), the buy-side entities, such as hedge funds, mutual funds, private equity funds, pension funds, unit trusts, and life insurance companies, are actively using it to build fundamental investment models to outperform the market.

Alternative data, compared to the usual financials gathered from traditional sources, is difficult to utilize in strategic plans. It is often unstructured, lacks specific patterns, and is collected very frequently. Thus, the investors need expert personnel and various technologies, including analytics platforms, fluid data architecture, data science, and testing tools, to leverage the meaningful information from it. Further, Artificial Intelligence (AI) tools, such as machine learning and Natural Language Processing (NLP) are gaining popularity for analysis. AI-enabled processing increases information generation and helps to extract hidden patterns. As such, AI-based analytics tools are anticipated to boost the growth of the market for alternative data over the forecast period.

While most companies utilize various sources and tools to gain insights and predictive capabilities, regulatory constraints are expected to be the primary challenges for the market players. The increasing emphasis on regulations such as California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR), along with other privacy regulations, pose threats to some of the alternative data sources. For instance, sources such as mobile devices, social media, and mobile application usage often conflict with consumer privacy issues. Any dataset that companies analyze needs to be completely free from Personal Identifiable Information (PII). Therefore, the providers’ compliance with privacy policies is a crucial factor for sustaining the market.

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The global natural language processing market size was valued at USD 27.73 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 40.4% from 2023 to 2030.

The global mobile application market size was valued at USD 252.89 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 14.3% from 2024 to 2030.

Key Companies profiled:

·         1010Data

·         Advan

·         Dataminr

·         Earnest Research

·         M Science

·         Preqin

·         RavenPack

·         Thinknum Alternative Data

·         UBS Evidence Lab

·         YipitData

Key Alternative Data Company Insights

Some of the key players operating in the market include UBS, M Science LLC, and RavenPack.

UBS provides data-driven insights by harvesting, cleansing, and connecting numerous data items across various specialized areas. The company provides insights for more than 1,000 companies of all sizes on a subscription basis to its Evidence Lab Innovations platform subscribers. UBS offers insightful datasets across more than 55 specialized products. The company’s various types of alternative data offerings include geospatial data, pricing data, sentimental data, social media data, and transaction data, among others.

M Science LLC is a data-driven research and analytics firm that provides critical customer insights to leading financial institutions and private & government corporations. The company integrates data science and technology, and financial models to transform raw data into actionable insights, enabling its customers to make smarter and more informed decisions. It caters to automotive, consumer durables, internet & telecommunication, and media industries.

Thinknum Alternative Data and Earnest are some of the emerging alternative data companies.

Thinknum Alternative Data organizes, processes, and analyzes public data from the web and offers over 300 companies (across the globe) unique real-time insights. The company’s clients include hedge funds, universities, internet companies, and investment firms. Its clients access these datasets via an Application Programming Interface (API) and User Interface (UI). A few critical datasets include job listing sites, LinkedIn profiles, and Facebook followers, among others.

Earnest is a data analytics company that provides critical information on consumer spending habits to government agencies, corporations, management consultants, and institutional investors by utilizing real-time data. The company uses tools for fundamental analytics of retail pricing, healthcare claims, consumer spending, and foot traffic to offer structured datasets with clear and correlated signals. These datasets are computed to understand national health trends and consumer habits.

Recent Developments

In April 2023, Thinknum Alternative Data launched new data fields to its employee sentiment datasets for people analytics teams and investors to use this as an 'employee NPS' proxy, and support highly-rated employers set up interviews through employee referrals.

In September 2022, Thinknum Alternative Data announced its plan to combine data Similarweb, SensorTower, Thinknum, Caplight, and Pathmatics with Lagoon, a sophisticated infrastructure platform to deliver an alternative data source for investment research, due diligence, deal sourcing and origination, and post-acquisition strategies in private markets.

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