We look at a lot of startups that fall into the "social sentiment indicator" space-software products that track mentions on social media and newsfeeds and then use proprietary algorithms to ascertain what the public sentiment is about a stock, whether bullish or bearish. We're still trying to figure this space out. In our experience, professional investors consistently ask for tools to help them make better assessments of market sentiment on their own, so they can have more nuanced control over how to profit from their own differences in opinion. We're still trying to understand the market size for products that take the discretion away from the investor and lock it away in a "black box".
While we have struggled with investing in companies that solely sell indicators, we love data tools that empower investors to be better at their jobs, and we believe that social media, newsfeeds, and blog RSS feeds represent an ocean of valuable data. If any of you joined us for our recent ValueStream 2 Year Birthday Bash, we listed web-based data tools for asset managers as one of the three key themes we are seeking out for our next cohort of portfolio companies.
This is why we are excited to introduce TickerTags as the latest addition to the ValueStream Development Lab. At first glance, TickerTags may look like a social sentiment startup, but if you dig deeper you will realize that the firm does not take an opinionated view on social and web data sources-instead TickerTags offers a powerful tool for discovering new pieces of information about companies in your portfolio that you may have not previously analyzed. We feel that this aligns well with our thesis of empowering the active investor with better information to make smarter decisions and generate superior returns.
TickerTags is a platform for collaborative tagging of keywords to publicly traded securities. This results in a regularly updated taxonomy of over 250,000 words and phrases that each have a meaningful connection with one of 8,000 publicly traded securities-including competitors, trending topics, brand names, and so on. They are working on both a mobile and web based product that allow users to investigate tags related to securities, set alerts, and read related news, tweets, and RSS feeds containing those tags. For all of you Quants out there, the company will be offering an API that allows firms to consume their constantly updated tag library and associated feeds and back test against historicals.
We became interested in TickerTags initially because of the great team - two Dallas-based founders (Chris Camillo and Jordan McLain) who launched and bootstrapped eCarList in 2006 to a $48M acquisition by DealerTrack Inc. in 2011. When we dug further into Chris and Jordan's business, we realized there is a tremendous amount of information connected to securities that is not reviewed by analysts today, mainly because they are not aware of its existence. When information is directly associated with a security (such as a research report), this connection is obvious. When a company name is mentioned it is easily searchable. Finding less obvious connections are much harder-such as articles about a new emerging regulatory requirement that may affect a company's valuation, or when a competitor's brand is trending with industry bloggers and early adopters.
Research firms have attempted to create keyword libraries using their internal researchers, with varying degrees of success. We like the social web approach that the TickerTags team has taken, using a network of knowledgeable "Tag Curators" who cover individual stocks and update these tag libraries as the market changes, with feedback from the broader TickerTags community continually provided through the app. We believe the "wisdom of the crowd" approach can provide a more complete and timely taxonomy compared with a solely internally managed approach. In addition, by offering this service as an API in addition to a web application, additional products (including proprietary applications and algorithms) can be built on top of the TickerTags tag library and data feed.
The TickerTags team is releasing their mobile and web based apps into Beta soon, and is recruiting curators for the platform now. If you have an interest in either, please reach out the ValueStream team and we'll get you looped in. In the meantime check out the team's website at TickerTags.com to learn more.