ACE Consensus has built a sophisticated platform to help stakeholders make better sense of analyst forecasts
A Q&A with ACE Consensus founder and managing director Alex Money. The London-based company, which is a digital platform that enables the gathering and evaluation of analyst forecasts, was founded earlier this year and was awarded £20,000 in Seed funding from the Oxford University Said Business School’s Seed Fund in early July.
SUB: Please describe ACE Consensus and your primary innovation.
Money: ACE was built to help make better sense of market forecasts. For example, when a dozen financial analysts estimate next year’s earnings per share [EPS] for a multinational company, their assumptions about future exchange rates might have a big impact on their estimates. But it’s impossible to distinguish the currency assumptions from performance expectations within an average EPS forecast. ACE makes this distinction possible.
Our primary innovation has been to develop an approach where producers of information—analysts—provide the transparency necessary for consumers of that information—such as investors—to extract maximum value. It’s taken us a long time—several years—to work out how best to do this. ACE is the result of that process.
SUB: Who are your target markets and users?
Money: There are lots of people for whom ACE data is valuable. These include investors, analysts, the financial media, regulators and quoted companies. Our business model targets quoted companies as customers in the first instance, while financial analysts obviously interact with the platform.
SUB: Who do you consider to be your competition?
Money: This is not a new problem, so in that sense there are various competitors. Amongst the most formidable are the big financial data vendors, but equally important are the companies we seek to sell ACE. They have been forced to develop workarounds to poor data, and we need to demonstrate why ACE is a better proposition to whatever they’re doing themselves. Other competitors in our mold also exist, although we believe we have several years’ head start in terms of developing our IP.
SUB: What differentiates ACE Consensus from the competition?
Money: I guess we have a unique approach. We’re looking to contribute right across the value chain, from helping the analyst to work with better quality market information; to giving companies deeper insight into strategic expectations; to providing investors with proprietary data. Joining up the dots is complex, but our experience is an important competitive advantage.
SUB: What were the first steps you took in establishing the company?
Money: The first step was probably lots of agonizing. Was there really a need for such a product, or would ACE become a solution looking for a problem? I spent over two years validating the concept, mainly by talking to people who work in various ways with consensus data. Only once I was clear about what I was trying to do, and why, did I get to work on a prototype. And of course, the first version still missed the mark by miles.
SUB: What was the inspiration behind the idea for ACE Consensus? Was there an ‘aha’ moment, or was the idea more gradual in developing?
Money: Two jobs before doing what I’m doing now, I was a portfolio manager and the middle job was investor relations advisory. In that second role, I had to spend a lot of time working out what consensus estimates were from my clients. I cannot pretend that the mechanics of manually gathering consensus estimates is a barrel of laughs. It got me thinking: surely there is a better way.
SUB: How did you come up with the name? What is the story, or meaning, behind it?
Money: ACE stands for ‘Analyst Consensus Estimates.’ You can see that we dispensed with the services of a marketing agency on that one, hahaha.
SUB: You recently raised £20,000 in Seed funding from the Oxford University Said Business School’s Seed Fund. Why was this a particularly good time to raise funding?
Money: We raised £20,000, or about $30,000. It was a good time for various reasons. We had reached MVP, and had one of the UK’s largest companies as our first client. Now it was about broader validation and scale. While the investment in absolute terms from the Seed Fund is not huge, it confers an important degree of credibility, plus it opens access to follow-on funding, talent, and sources of constructive, critical input. We’ve already added to our investor base and we’re now looking to leverage the opportunities that we’re creating for ourselves.
SUB: How do you plan to use the funds?
Money: Further investment in the platform principally, plus some niche marketing.
SUB: Do you have plans to seek additional outside funding in the near future?
Money: Yes. Working on it now.
SUB: What have the most significant obstacles been so far to building the company?
Money: We operate in one of the few areas of the financial markets which has yet not seen much impact from disruptive technology of the sort ACE adopts. In a way, that’s what makes it so exciting. But equally, the vested interests for the status quo are also strong. So, we have had to work hard to get our message across. We’ve been doing exactly this for quite some time now and, I think, getting better at it.
SUB: How does the company generate revenue or plan to generate revenue?
Money: ACE uses a software-as-a-service model.
SUB: What are your goals for ACE Consensus over the next year or so?
Money: Well, we have narrow targets and broad ambitions. The targets include achieving certain milestones on platform development, analyst adoption, and client acquisition. The ambitions are almost evangelistic, but focus on breaking the status quo and ensuring that ACE delivers everything that its users deserve.
ACE Consensus – www.aceconsensus.com