Qineqt, a start-up alternative data firm founded by a former trader at SAC Capital Advisors, has shut down, according to three people with knowledge of the matter.
Founder Nadir Khan, whose New York-based firm began operations in December, did not respond to emails and a phone call seeking comment. The firms website is no longer up and running.
In an interview last year, Khan said he planned to turn Qineqt into a business that could compete with financial data firms like Bloomberg and Standard & Poors, using infrastructure built from scratch. Qineqt sought close partnerships with money managers, including hedge funds, that could request hard-to-find data and then get exclusive access to the information for a certain period of time. With each request, Qineqts central database would be built out overtime.
The firm used 230 researchers based in Pakistan to get information from primary sources, such as workers at Chinese ports to find out how many ships were docked.
Justin Zhen, co-founder of Thinknum, a New York-based alternative data firm that caters to hedge funds, traditional asset managers, family offices, private equity firms and investment banks, notes that going from start-up to profitability is difficult. Alternative data generally includes information found online, using sources such as social media.
Qineqt was trying to do a little bit of everything. But the start-up world is really hard, Zhen said, noting that hed heard from his hedge fund clients that the firm had closed. You need to focus and get the product right, he said.
Zhen says Thinknum, which was formed in 2014 and started an alternative data product a year later, is profitable and has more than 500 clients. Thinknum provides data such as government contracts, product pricing and other information on public companies. According to Integrity Research, a third-party research firm, 20 percent of Thinknums clients are banks, including Goldman Sachs Group, Jefferies Group and Wells Fargo & Co.
Zhen says many people are trying to gain a foothold in alternative data, but he expects only two or three to ultimately own the market.
Its just like what happened in the financial data world with Bloomberg and others, he said. The ones who were way ahead were those whose products were being used early. Then they added features and more data along the road.
Zhen says hedge funds that have looked at Qineqt have told him that licenses for its product were more than $1 million annually. In comparison, Thinknum charges $4,800 a year for each user, a fraction of Qineqts price tag.
Part of the price difference may be attributable to Qineqts manual process of collecting data using analysts in Pakistan, a process Khan had said he would automate over time. Thinknum uses machine learning techniques to collect and organize its data.
They were collecting data manually, which made the process difficult and expensive, Zhen said.