The need for junior investment analysts may soon be a thing of the past, according to Swedish automation start-up Batonics. The firm has seen a growing interest in its proprietary platform for automated investment analysis as real estate firms play catch-up on automation.
A real estate data provider was recently shown a demo of the Batonics product. AlNomany said the company was asked to demonstrate its capabilities in natural language (NL) analytics and that the Batonics ‘engine’ could complement and be used on top of its own private data into a callable form to query analysis commands directly.
The input is in NL and free-form and can generate tabular results and graphics. AlNomany believes the technology could have implications for private real estate and other illiquid asset classes. “This type of automation could well replace the junior analyst roles in the near future and is already more widely used in other asset classes, but real estate and private markets have so far been lagging behind,” he said.
Batonics has so far built seven engines for different types of clients in the real estate sector, including a Monte Carlo simulation for cost-sensitivity analysis for Guatemalan real estate company Intus, and rental data analysis for crowdfounding real estate platform Fractal Property.
Although Batonics has gained most traction in real estate and private markets since launch in 2019, AlNomany said the company is building a platform to automate most of the investment analysis and scouting processes for liquid and illiquid asset classes.
Another reason for the real estate and private markets bias is the contact network of the business development team, AlNomany admitted. A recent hire is Andrew Lee, previously at BlackRock’s real estate private equity department and Google’s Sidewalk Labs in business development. Lee joined as an adviser for Batonics’ exansion in the US and Americas, with a particular focus on the real estate sector.
The latest recruit is Serge Houles, who joins Batonics from Informed Portfolio Management, the Swedish systematic hedge fund that shut after it lost US$4bn. Houles has been brought in as an adviser to drive business development and fundraising in the Nordics initially, but with a remit to broaden this globally. Despite being based in Sweden, Batonics’ clients are all based outside the Nordics, AlNomany added.
AlNomany, who has an engineering background and is a serial entrepreneur and a part time-fireman in Jämtland, in the north of Sweden where he is based, is convinced that the AI engines and platforms can add value by exploiting investible anomalies across asset classes faster and cheaper than currently possible. Having an “omnipotent junior investment analyst” able to coordinate various data sources will be invaluable as investors become increasingly cost conscious in their search for alpha, he said.
In the four years since launch, AlNomany has been busy building his team an explaining the premise to potential backers, such as angel investors, venture capitalists and hedge funds. He said hedge funds are often ideal as they can also use the platforms or engines in their investments.
But the issue is they often want an exclusive deal and so far AlNomany has not been tempted. “We have built seven of these engines, so we are just starting. I see 50 or 60 of these engines on our entire platform in the coming years,” he concluded.
* A previous version of this article reported that a specific company had shown interest in the Batonics technology