Alternative data will become democratised like financial data in 2-3 years: Thurro founders

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Karthik Ranganathan and Mrinalini Rao like to call themselves as evangelists of operational data, or what is known in market parlance as alternative data. In 2018, the couple founded Thurro, a market intelligence firm that compiles unstructured data from publicly available information and tries to make sense of them. In a freewheeling conversation with Moneycontrol, the founders spoke about what motivated them to get into this line of work, and how they see this space evolving in the days ahead.

How did the idea of setting up a firm specialising in market intelligence come about?

Karthik: To evaluate a business one needs to have a 360 degree view– financials, valuation and most importantly understand how the business will perform and can it sustain this performance in the long term – what Phil fisher called as “scuttlebutt”.

Today most people focus on the first two - financials and valuation because that is easily available in a structured form. “Scuttlebutt” was performed by intelligent investors by feet on street research, dealer channel checks, supermarket aisle walks, etc – an intensive and time consuming exercise.

We chanced on a case study where one fund manager used satellite imagery in the US to look at the occupancy of parking lots to analyse the footfalls of retail chains. This was an exciting use of technology to do a “digital scuttlebutt”. While in India, satellite imagery is not very helpful because there are clearly no parking lots, we realised that there is a lot of publicly available data that if aggregated and analysed could provide insights on sector and business performance. However these data points are unstructured and lie within pdf reports and make it difficult to access. We realised that we could solve this problem using technology.

Give us an example?

Karthik: Say if you want to track the performance of the two-wheeler electric industry today – the usual way would be to do a google search and piece together information from a lot of news reports. But these numbers may not be reliable as different reports have different numbers and may not be sourced.

But today you can actually do better – The government has become more open and a lot of information is being made available. The Vahaan portal provides comprehensive data monthly on the number of vehicles registered – state wise and OEM wise. This data if collected and pieced together can provide trends on how the electric vehicle industry is performing and one can also compare the performance of various players.

Mrinalini: Today both the government and regulators are publishing more and more data in public interest. So you have data across insurance, banking, AMCs, mining, logistics, cargo, commodity prices etc. So, how can we democratize the availability of this data? That is the problem we are trying to solve.

Take us through the journey of how you set the business up?

Mrinalini: In 2018, we built the tech stack to started collecting and aggregating the data. In 2019-20 we started offering it to investors in the form of a service business, like creating PDF reports on specific sectors and companies. We started developing the SaaS platform somewhere in 2021, and went live in July 2022.

When we started, we had a 50 percent idea of the sources. We started looking for more sources, and because we had some early customers- they would tell us what information they wanted or even point us to new sources. This made us to look for data sources that could answer the specific questions they asked. We built more data sets over that period with customer feedback. We do that even now.

Have you taken funding from investors?

Mrinalini: Currently we are bootstrapped. We have onboarded customers and we also have a small consulting business, which ensures that we are not seriously burning cash even if we are investing for the long term.

What is the market for this kind of data right now?

Karthik: We are in evangelisation mode right now. We have a few PMSs, and some HNI customers who believe in the power of data and have started using it extensively.

Seasoned investors say that too much data can also be overwhelming. As it is there is too much data available out there. So how does additional data help?

Karthik: It is not just about how much data you have, but how well you can place it in context. Let's say you want to understand tractors. So you can take that one data point of tractor registration and analyse it to death. But viewing it in the context of cropping, average land holding etc may be even better. In addition one can look at how reservoir levels are changing in India? Are you likely to be into a cycle where reservoir levels are lower than long term averages and are you going to have some issues in agricultural output, etc. Similarly, what is happening to fertilizer output? Those are questions that actually indirectly drive tractor registration or tractor sales.

How competitive is this space right now. Lots of players would have got in, considering that it is based on publicly available information?

Karthik: We have not seen too many players in this space and the ones who do so only provide insights at the macro level: GDP, GST etc. We match the macro with micro. We give the industry numbers and also provide the company level numbers wherever possible.

How do you see this space evolving. Already many fintechs have democratised the market for financial data. How do you see the market for alternative data evolving in the days ahead?

Karthik: What is alternative today, usually automated, becomes par for the course 2-3 years down the line. I prefer to call it market intelligence. Lets look at the market today - while there are 13 crore demat accounts in this country, a vast majority of investors are actually trading in options. I believe that a lot of these young audiences who are coming in, will transition to becoming long term investors because at some time just trading in options may not generate expected returns. This is the market we want to tap- people who will want to understand the businesses they invest in closely. So from this 13 crore investors, let's say even if the top 1 percent of people (13 lakh) will want to understand the businesses before they invest, that is a huge market.

Mrinalini: We are also experimenting right now. It's completely a new space. So far it's only brokers who are using some of this data in their research reports and making it available to a select set of people. People are still used to looking at financial data. We are trying to popularise the idea of why they should look at market-intel.

Do you also use satellite imagery, something is quite popular in the west?

Karthik: We've done it for some corporates. But we have not seen a use case in the investing world right now where it can be value adding or alpha generating. But we are always open to the idea.

What about sectors like mining construction, their satellite imagery would be handy to give an idea of the activity actually happening at the ground level?

Karthik: It would be. Let's say anybody who is investing on roads or who wants to predict when will toll revenues start kicking in. Just having satellite imagery which tells when the road is going to get ready or what the state of readiness will be. However, Coal India’s monthly production is reported by the Ministry of Coal within 5-6 days of the month ending. So even without the satellite images we can get to this information.

Once the concept of alternative data gains popularity, more players will step in. And since it is data and technology, a new entrant will be able to replicate things more easily than it is possible in other fields. What would your strong point be?

Mrinalini: I am sure that others can recreate this. We started the entire process collecting unstructured data in 2018. So we are pretty much there in terms of having a long history of information. In a lot of cases the past history of data is not available. So new firms will be disadvantaged to that extent.

Do you invest using your own data and what has been the results like?

Karthik: Yes, we do eat what we cook. We believe in the power of data and how it can throw insights on sector and company performance. While we cannot name stocks, we cannot think of investing without looking at data to back our thesis.