Context Relevant CEO Stephen Purpura can’t tell you the Wall Street firms that are buying up his company’s predictive analytics software.
Too much money is at stake.
That’s because the big data offerings developed by Purpura’s 26-month-old Seattle startup have already become a serious competitive advantage in the financial services arena, and most of the firms don’t want the secret out.
But word seems to be getting around the venture capital circles, with Context Relevant announcing today that it has raised $21 million in funding from a group of investors that includes San Francisco-based Formation 8, as well existing investors Madrona Venture Group, Bloomberg Beta and Vulcan Capital.
Context Relevant must be doing something right, since the investment round united the owners of two of the most bitter rivals in professional football: Paul Allen and Vulcan Capital’s Seattle Seahawks and Gideon Yu of Formation 8, co-owner of the San Francisco 49ers.
The Context Relevant board meetings could get very interesting, with Purpura noting that he “can’t guarantee that all of our investors will win the Super Bowl every year.” In fact, Purpura said he successfully pitched Formation 8 while attending a Seahawks-49ers game at Candlestick Park last season.
It’s a bit unusual seeing a Seattle startup making inroads on Wall Street. But Purpura loves the West Coast mentality that his company’s big data scientists are bringing to the problem.
The company is currently taking data feeds from Bloomberg, and then mixing that information with data from financial institutions, allowing them to offer better recommendations to clients about what products to buy.
“We don’t really have any competition. The big data platform that we have built enables this previous impossible use case to take place,” said Purpura. “And it is really valuable. The companies that are using it are finding it to have an extremely large ROI.”
Purpura declined to name how many individual customers it has or who is using it. However, he did offer this example to better describe Context Relevant’s offering, and what it is doing on Wall Street.
“Say you are a trader at a bond desk for a large bank. You are watching the market change in real time. Our software will update you in an instant about what bonds are the best buy in each class. In addition to that, one of the other complexities when you buy bonds is that customers buy what are called hedges to offset the risk that they are taking when they buy the bonds. Our software actually instantly calculates the best hedges for each of the best bonds in each class. This technology never existed before and was ultimately done by hand, and some of it has been guess work. The level of automation we are providing for finding these best buys will likely offer a competitive advantage when it comes to adopting our product.”
Context Relevant raised the cash because Purpura said they need to hire people to help meet demand for the products. Total funding in the 30-person company, which has recently opened offices in the Bay Area and New York, now stands at $28 million. The company has budgeted to hire an additional 100 people over the next two years or so.
“The exciting thing for Seattle and the company is that we are seeing growth — especially in New York City — which is much larger that the vast majority of our competitors,” said Purpura. “Our investors are incredibly excited because we just do things that big data has promised for a long time, but not delivered on.”
While Context Relevant is making inroads on Wall Street, there’s a lot more in store. And that’s part of what got Formation 8’s Jim Kim intrigued.
“The team at Context Relevant is at the leading edge of productizing data science for the world’s premier financial organizations, with many adjacent markets still to come,” Kim said in a release.
Context Relevant was featured last December at the GeekWire Gala as a “Seattle 10” company, one of the most promising up-and-comers in the region.