How This Start-up Powers On-demand Investment Research in Southeast Asia
Smartkarma is helping investors access quality financial insights
PHOTO CREDIT: Getty Images
For start-ups in Southeast Asia and beyond, it’s hard to ignore the potential of the financial services industry.
Entrepreneur Jon Foster noticed a gap: While the financial services industry had been innovated by better technology and tools, the same could not be said by its investment research counterpart.
“It is an industry sector ripe for disruption, with many fundamental structural issues. For example, the well-known conflicts of interest and the need at the core of research for it to be unbiased and provide insightful, useful recommendations for investors rather than tied to banks’ interests,” says Foster.
Foster founded Smartkarma in an attempt to address this issue, along with the bloated costs of production, outdated distribution channels, and mismatched supply and demand.
Smartkarma offers investors independent and timely research from a pool of over 400 research providers — “Insight providers” in the company’s lexicon — covering over 2,400 companies across 15 Asia Pacific markets.
“One of the most innovative benefits to investors is the platform’s ability to provide differing opinions from multiple analysts on the same topic. Never before have bullish and bearish insights been at the investors’ fingertips, enabling investors to join the dots and make their own profitable decisions,” says Foster who points out that more than 160 financial institutions are now clients.
The direct access that investors have to research providers also means the content they get is more relevant.
“Unlike traditional waterfront research, Smartkarma provides investors with direct access to research contributors, creating a much stronger correlation between research demand and supply, and addresses information overload concerns as investment managers globally can take advantage of Smartkarma’s expert insights, delivered when and how they need it,” says Foster, who serves as the company’s chairman.
Investors access the research buffet-style rather than a la carte through what Foster calls “a unique Spotify-esque business model that enables asset managers to pay a single subscription for unlimited, personalized access to insight across all providers.” Each client pays $7,500 per user with discounts available for teams with more than five members.
Of course, the success of Smartkarma hinges on the quality of its research. To this end, the company puts research providers through a rigorous vetting process — one that begins with a three-month probationary period before even its first report is published on the platform.
“Insight Providers are paid on a measurement known as Quantified Value Add (QVA) which is not only how much a piece of their insight is read but also around engagement metrics on the platform and other similar measures. In this way, Insight Providers are rewarded for delivering appropriate insights to the investor community as well as participating in the overall community itself,” explains Foster.
Since its launch in April 2016, Smartkarma has grown rapidly — its top ten clients alone account for $13.5 trillion in assets under management. The company also raised more than $21 million, with Sequoia Capital leading its Series, that will help it expand its footprint across the globe.
Smartkarma now bills itself as the largest provider of independent insight in Asia.