Each month as part of StartHub's Startups to Watch Program, we connect with the winning company to learn more about them. We had the pleasure of interviewing Zac Sheffer, CEO of Elsen. Here’s what we learned:
Tell us about your company. What is Elsen?
Elsen creates a platform-as-a-service for large financial institutions that allows anyone to effortlessly harness vast quantities of data to solve the most complex problems. The Elsen nPlatform transforms how financial professionals work – including those in investment, research and analytics roles – by offering a way to optimize data vendors and lower operating costs, use incompatible data, and construct new products and new strategies that generate alpha.
What is your background?
I’m a mechanical engineer by training and worked at Schneider Electric before catching the finance bug. I even have a couple of patents in cool things like fluid dynamics.
How did you come up with the idea for Elsen? Who is your target customer?
The idea for Elsen hit me while I was working at Credit Suisse. When I first started, I was super excited to begin working at one of the largest investment banks and get my hands on the amazing resources and technology they had to conduct research and make investment decisions. But it didn’t really turn out like I expected. I was shocked to see how antiquated their technology was. And this was at one of the world’s largest financial institutions – a company with virtually unlimited resources. I knew there had to be a better way so I started to build it myself.
How do you think Elsen is going to disrupt the market? What are the main differentiators between you and your competitors?
Our competition is really the status quo like I experienced at Credit Suisse. Companies across the financial services industry are relying on pretty old technology that requires data scientists and PhDs to run it. These people are experts in what they do and they still spend a majority of their time managing data and getting it ready for analysis. That means they only spend a fraction of their day actually using data to develop insights that guide investment decisions. And this is the best case scenario for “quants” – the rare breed of people that have knowledge in both finance/investing and technology/data science. For fundamental investors – the traditional Wall Street types who may not have as good a grasp on technology – the process is even worse. They have to partner with tech experts to explain what they want to do with data and then wait days, sometimes weeks to get a response.
We’re shaking things up by making this process easier for both groups. We take care of all the data management challenges and give quants an easy to way access the data so they can spend more time working with it. And we also make it easy to build point-and-click user interfaces on top of the data to make it quicker and easier for fundamental managers too.
Our relationship with Franklin Templeton, which we announced in February, is a great example of this. Franklin Templeton was about to embark on a huge project to revamp the way the firm manages the massive amounts of data it uses for investment research. They were going to do it themselves until they realized we had already built what they needed and could get them up and running in a fraction of the time, and at a fraction of the cost.
Who are your main investors?
Elsen is backed by a combination of venture capital and hand-picked angel investors from the financial community including Accomplice, Hyperplane Venture Capital, Launch Capital, Sequoia Strategic Advisors, and Bret Siarkowski.
Why did you decide to start your business in Boston? How long has your company been around?
We founded Elsen in 2014 through Northeastern University’s student-run venture accelerator, IDEA. I met my co-founders at Northeastern so that’s why we founded the company here. Once we were up and running it just made sense to stay. Boston has a lot of background and talent in both the financial services and technology industries, and since Elsen plays at the intersection of both, it was a perfect fit.
What resources in the startup community have contributed to the success of Elsen?
The IDEA program at Northeastern was a big one. It really helped formulate our idea and take the first steps towards building it into a company. But there were some other resources that were very helpful in our early days too, like the DCU FinTech Innovation Center, which provided office space and an environment to meet other startups and learn from experienced professionals.
Fintech Sandbox has been one of the most valuable resources for us. We were selected as a member of its inaugural class in 2015 and the industry connections we were able to make through the Sandbox were invaluable. For example, we gained free-access to critical data from vendors like Thomson Reuters and MSCI that we used to build and test our technology. And that led to an ongoing relationship with Thomson Reuters Financial & Risk business (now called Refinitiv) where we partnered with them to build the first commercial product on our technology, the Elsen nPlatform. Refinitiv QA Point Powered by Elsen is a web-based application for complex factor creation and backtesting workflows that allows any user to test investment models and create new strategies in minutes.
Most recently, we were accepted into the inaugural cohort of MassChallenge FinTech, which has been another great experience to connect with big players in the industry and get valuable feedback and guidance.
How do you use StartHub professionally?
It’s a great resource to stay plugged in to the startup ecosystem in Boston. There’s so much going on that it’s sometimes difficult to stay on top of it all, but things like StartHub’s email newsletter and event listings make it easier to find the news or events that are going to be most relevant for me and Elsen.
What are the next steps for Elsen?
Keep growing. We’ve had a great year so far, kicking off our work with Franklin Templeton and more recently starting to work with Fidelity Investments through MassChallenge. Over the past few years, we’ve spent a lot of time building our technology and through relationships like these, I think we’ve proven it’s ready for prime time. The next step for us is to continue helping organizations like this simplify the way they work with data while improving the value they get out of it.
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