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AlphaSense, an AI-based market intel firm, snaps up $150M at a $2.5B valuation

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Market intelligence — where organizations gather information about industries, other businesses, trends and more in order to use that data to help make business decisions — has become a huge industry in itself over the last few decades, projected to be worth nearly $84 billion in revenues this year. Now, as newer innovations like ChatGPT threaten to cannibalize the market, one of the bigger startups in the space, AlphaSense, is announcing a significant fundraise of $150 million to double down on the opportunity for growth.

The Series E round — which bumps New York-based AlphaSense’s valuation up to $2.5 billion — is being led by Bond, with participation also from CapitalG (Alphabet’s fund focused on larger investments), Viking Global Investors, Goldman Sachs and new backer BAM Elevate.

These are both financial and strategic investors: AlphaSense has more than 4,000 enterprise customers — covering “the majority of the S&P 500, the world’s largest banks, investment firms, and consultancies, and leading companies spanning every sector of the economy” — and more specifically the list includes search engine behemoths Google and Microsoft, J.P. Morgan and BAM Elevate.

That list of customers, and the basic numbers of this latest round, are both impressive considering the state of play right now, when even startups with promising technology are finding it hard to close rounds, stand up strong valuations and win business.

But AlphaSense’s own activity speaks to the ups and downs in the current market. This is a definite up-round — in the last 15 months prior to today, the company collectively raised $325 million in its Series D (first $225 million led by Goldman Sachs and Viking Global and then a $100 million extension led by CapitalG), ending with a $1.8 billion valuation.

On the other hand, AlphaSense was originally looking to announce this very round, at this very amount, back in June, before delaying for three months (during which time some details of the round leaked out anyway). We’ve asked the company why it held off.

There are a number of ways for organizations to identify and gather market intelligence these days, including the use of in-house research teams, enterprise search and business intelligence tools like LexisNexis or Elastic, outside consultancies, and much more.

AlphaSense’s spin and unique selling point is that it positions itself as a platform that is part data crawler, part insights extractor.

Today the company covers some 10,000 sources of information that span private and public content published by big and small research firms, government and other public bodies, and competitors and other businesses. One particular area of focus has been honing in on financial insights, which AlphaSense beefed up with at least two acquisitions: Stream, which transcribes and catalogues “expert” interviews (executives, competitors, and supply chain members of top companies asked in-depth questions about an industry by analysts); and Sentieo, a financial intelligence platform that targets investment managers.

Its platform — sold as a service (“insights-as-a-service” is actually a thing) — can be used to gather information about a specific company, but in the process of doing that, AlphaSense has built machine learning and its own natural language processing technology to “read” that data and make it into a digestible narrative and series of graphics of their own.

“We focus on the search for unstructured information, and we provide structure to it,” is how Jack Kokko, the founder and CEO of the company, described the process to me last year. Web search intelligence is a problem that is constantly being fed through machine learning algorithms. The more people search on Google, the better Google gets, he said. “But our system has to understand language and land on the right information without the benefit and insights of billions of web searches. None of that exists for private information.”

That is also, it seems, what will help AlphaSense continue to differentiate itself — at least for now — and outperform against the threat of generative AI platforms like OpenAI’s ChatGPT, which has, unsurprisingly, already been weaponized (or celebrated?) as a market research engine.

Speaking to me in connection with this latest round, I asked about the impact of ChatGPT, which has really seen a surge of interest in the last year. It gives “somewhat random results that don’t understand the business or commercial standpoint” of the researcher asking questions of it, he said. “We are training our own Large Language Models, and we are seeing better performance that way.”

However, he’s canny enough to know that this, longer term, will only be a part of what makes AlphaSense useful to its customers. “We can’t predict that will be the case 12 months from now. We need to be on top of many things at once,” he added.

That’s something that AlphaSense may well be using its own engine to track for itself, and if it’s as effective as its investors and customers bet it is, that will keep it one step ahead of the rest.

“At Bond, we look for iconic technology companies that are shaping the future,” said Jay Simons, general partner at Bond, in a statement. “With the ability to deliver the right insights and data to help businesses confidently make the everyday, strategic decisions that ultimately define their future, AlphaSense immediately struck us as a category creator emerging into one of those iconic companies that significantly advances how the business world works.”

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