The proposition is that retail investors would benefit from analyst research that was easy to understand and act on. To best way to commercialize this idea, though, is to work through intermediaries to get this barstool-friendly information into the hands of ordinary folks.
Bridgewise, a New York-based startup that was founded in Israel, is using artificial-intelligence techniques to make available research on 36,000 listed companies worldwide in language people can understand. This ‘understanding’ is both figurative – by rewriting analyst research free of jargon – and literal, with a translation capability so investors don’t have to rely on English-language reports.
The startup has recently raised a $21 million Series A funding round led by Switzerland’s SIX Group.
Part of that funding is earmarked for global expansion, including Asia Pacific. The startup has set up shop in Singapore, scored a deal with Tokyo Stock Exchange, and hired a regional general manager, Kelvin Phua. Phua is a fintech veteran from the payments world, with commercial roles at PPRO and serving as PayPal’s country manager in Malaysia and Indonesia.
Get me rewrite
Phua compares Bridgewise’s ambitions to those of PayPal. “It’s similar in that we want to democratize the service and ensure equal opportunity. Digitizing payments led to knowledge. So will making research understandable to retail investors.”
He added that most Asian retail investors have no recourse to such research because it’s almost always presented in English. Few people in markets such as Japan and Thailand can understand it – or at least, not understand the highly arcane language used by analysts.
Phua says the service aims to be put to work in both directions. One way is helping Asian retail investors understand global research reports. The other is to help global investors, including institutions, have access in English to locally penned analysis of listed companies.
Knowledge is volume
Gaby Diamant, Bridgewise’s founder and CEO, says making all of this research available to institutional investors will help them diversify and broaden their coverage. Of the 36,000 companies tracked by the startup’s algorithms, about 20,000 are listed in APAC.
“Asian markets are experiencing high rates of growth and have lots of emerging tech companies, but few analysts cover them,” he told DigFin. “We’re opening up new investment opportunities.”
In this vein, if smaller companies have new channels for getting analyst coverage and investor interest, it should provide more trading activity, which can narrow spreads and support more domestic IPOs.
JPX Market Innovation and Research, the parent company of Tokyo Stock Exchange, says it has onboarded Bridgewise for similar reasons. In an announcement from November 2023, it said:
“JPXI will utilize Bridgewise AI technology to deliver more information of the Tokyo Stock Exchange listed companies to investors in Japan than ever before. At the same time, JPXI will help global investors find listed companies that are not covered by analysts, by disseminating information in multiple languages including English. This brings great opportunity to Japanese companies, as they can get more attention from foreign investors, thanks to Bridgewise technology that breaks language obstacles.”
The AI engines
Diamant launched Bridgewise in 2019 to help diversify the highly concentrated nature of analyst research. Except for a handful of the largest buy- and sell-side firms, analyst teams typically cover only a few hundred companies.
Retail investors, meanwhile, depend on either being served the same limited views by intermediaries, or by friends’ tips, hunches, or their own research efforts. Maybe the availability of reader-friendly research might help some more people make longer-term investments in companies based on fundamentals.
Bridgewise says it is making this happen through two proprietary software models. One is a machine-learning technique to rank every listed company in the world, either ranked or in peer comparisons, across more than 200 data points drawn from earnings reports.
Secondly, the startup has its own language-model software to add analysis on top.
With the recent funding, it is now working to layer large-language models on top of its internal data sets, to provide a more conversational interface.
Diamant says it is important to develop an in-house LLM. “If you ask ChatGPT, it won’t give you a recommendation to buy or sell. We do. We choose sides.”
Business model
DigFin asked why, if this ranking and peer comparison is so effective, does Bridgewise not run its own investment portfolio?
Diamant says the company’s original structure was as a hedge fund. He says the results of the algos is “amazing” but that this wasn’t solving “the real problem”, which is to provide knowledge, not performance.
He decided to pivot from running a fund to becoming a fintech: “We have no proprietary fund. Bridgewise is licensed as a financial advisor.”
Another tech priority is to make it easier to integrate its output with whatever platform its clients use. This ranges from a recent iPhone capability, so retail investors can download reports on the go, to plugging it into a broker or financial advisor’s platform, either for their clients, or for their own relationship managers.
Diamant says the startup now has about 6,000 analysts using it for sourcing company reports and is on track to onboard 25 million retail end-users this year. Bridgewise’s services are delivered as software-as-a-service, with subscriptions priced on a formula based on numbers of end customers, of analysts, and of features used.
Its biggest markets are Brazil, the US, and Diamant’s native Israel (he is now moving from Tel Aviv to the US to drive uptake there). With SIX taking a strategic position, it’s now being distributed across SIX’s European broker terminals. Another early client is online broker eToro. The deal with JPXI represents the first big win in APAC.
