Estimize, a site where users try to beat Wall Street analysts by accurately predicting public company earnings, has raised $1.2 million in Series A funding.
The company was founded by Leigh Drogen, formerly of StockTwits. Drogen has described Estimize as the quantitative flip side to StockTwits: Instead of aggregating general commentary and conversation about stocks, Estimize asks users for specific estimates about a company’s earnings per share and revenue, and then it averages those estimates. Using the wisdom of the crowd, Drogen hopes to provide better predictions than the analysts.
And it looks like there’s something to Drogen’s thesis. He says that when there are at least four predictions for a given earnings release, the Estimize average is more accurate than the Wall Street consensus 67 percent of the time. When there are at least 20 predictions, Estimize is more accurate 77 percent of the time. There are currently 1,300 community members contributing estimates, and the site has seen 11,000 estimates since launching in December.
It sounds like the business plan is starting to shape up, too, with “several $10B+ hedge funds” acquiring commercial data licenses. Drogen says the company is also “working on several high level partnerships with large financial data companies.”
The funding comes from Bob Green at Contour Venture Partners and Jim Savage at Longworth Venture Partners. Drogen tells me his next goals include adding data-visualization tools and macroeconomic data points, as well as continuing to grow the community. He also says he expects to see a big improvement now that Estimize has hired a lead designer. “We were sorely lacking that talent on the team.”
In a new blog post, Drogen also discusses the funding and recounts the company’s history. It’s a personal, not-entirely-triumphant narrative. Drogen expresses gratitude to StockTwits CEO Howard Lindzon, who “pushed me out the door” to start the company, and to the “members of the StockTwits community” who provided the initial $100,000 in funding. But he also says that the team “executed horribly over the first 6 months,” and he talks about the toll it took on his relationship with his girlfriend. Near the conclusion, he writes: “Now, as Chris Dixon likes to say, the clock starts ticking, the expectations go up, we need to raise our game again.”
Estimize is a buy side and independent analyst estimates platform. The firm was founded in 2011 by former quantitative hedge fund analyst Leigh Drogen, with the belief that sell-side analysts are not correctly incented to provide accurate and unbiased earnings analysis due to inherent conflicts within the investment banking construct. By crowdsourcing estimates from a diverse community of individuals, Estimize provides both a more accurate and more representative view of true expectations. 2682 analysts contribute to Estimize on over 900...
Contour Venture Partners is an early stage venture capital firm focused on working with companies that provide products and services in the financial services, internet and business services sectors.