Chaikin Analytics, a company that makes software for stock market investors and financial advisors, is raising $5 million, according to an SEC filing and confirmed by CEO and founder Marc Chaikin. It’s part of the company’s strategy to move into a new market that could set it up to get acquired. The fundraise is just one of a number of developments at the company, including a new Paoli office and a new product that Chaikin said grew revenue by 100 percent in 2014.
Helping money managers by 'taming big data.'
The company, founded in 2009, has $1 million committed so far. Chaikin declined to name the current participating investors. From 2010 to 2013, the company raised $4.8 million from angel investors, said spokeswoman (and Chaikin’s wife) Sandy Chaikin. One of those investors is Florida-based Christopher Castroviejo, according to SEC filings.
The New Product
Chaikin Analytics’ flagship product is a subscription-based investment analytics app launched in early 2013 that predicts how stocks will perform in the future. The software tells them which stocks to pick and which to stay away from. As Chaikin puts it, the company helps people who manage money make money by “taming big data.”
“Information overload is everyone’s biggest problem these days,” he said.
Their customers are “high net worth” individuals, which make up 40 percent of their revenue, and financial advisors, who make up the remaining 60 percent.
Before the company launched its new product, it offered a “freemium model,” with a free iPhone app and premium services. The subscription-based product, which runs $195/month for individuals and $250/month for financial advisors, made revenue shoot up 100 percent to $1.3 million in 2014, Chaikin said.
The new product was inspired by an old product, actually.
In 1992, Chaikin sold his stock analytics company Bomar Securities to a subsidiary of Reuters called Instinet for $8 million. Chaikin spent six years as a VP of Instinet, while Reuters folded Bomar’s stock analytics product into their own. Over time, with new product releases, the Bomar product got phased out. Chaikin’s former customers came back to him in the last two years, asking for a similar product, he said.
From Reuters and Instinet come Chaikin Analytics’ current leadership: CTO Laura Trumbull, who held a number of leadership positions at Reuters and Thomson Reuters, and president, Davis Gaynes, former vice president of Instinet.
Last May, Chaikin opened an office in Paoli, consolidating his two offices: one in Chester Springs and one in Philly’s Queen Village neighborhood. The reason? He wanted his team all in one place and many of his employees had left the city for the suburbs when they started having children. He also wanted, for recruitment purposes, to be close to the talent pools at big companies like Vanguard and Sungard.
Chaikin, 71, lives in Queen Village. He bucked the trend of Philly tech companies moving from the suburbs to into the city, and what’s more, it’s not everyday you see a CEO move company headquarters further from home, but Chaikin said it was the “logical next step” because of how many of his staffers had left the city. (The family issue is one that seems to be rearing its head more and more during conversations about if the city can retain talent and keep its tech scene vibrant.)
Still, the reverse commute is “awful,” Chaikin said. (“The biggest impediment [for a Philadelphia tech company] is the Schuylkill Expressway.”) His solution? Company apartments. They’re also for CTO Trumbull who lives in Stamford, Conn., and president Gaynes, who lives in New York City.
Next up for Chaikin Analytics is entering the hot “smart-beta” market. That means the company plans to develop automated investment strategies that companies that create “investment vehicles,” like ETFs, (think Vanguard and First Trust) can license. Evidence that smart beta is hot? NASDAQ recently announced that it would buy Dorsey, Wright and Associates, a Virginia-based firm that specializes in the practice, for $225 million.
Is an acquisition the end goal for Chaikin?
“I’d say so,” he said. “There’s a chance we might go public, like WisdomTree, but ultimately, because we have angel investors who have backed the company up to now, an acquisition would make the most sense.”
Though “you’ve got to be flexible and see where the market takes you,” he said the market seems to be pointing at the acquisition route.
He also aims to grow his staff from 15 to 25 this year.