With Banks, Insurers Knocking, Context Relevant Lands $21M to Answer
Context Relevant has focused its big data analysis software on deep-pocketed financial services firms that are looking for an edge, demand tight security, and are willing to pay for it. The strategy appears to be winning as the Seattle-based startup has raised $21 million in new capital to hire 100 people over the next 18 months to address a growing backlog of new business.
“We are literally limited by our ability to add people,” says founder and CEO Stephen Purpura. “We are continuously turning away potential customers because we can’t service them in a timely manner.”
The Series B round was led by Formation 8 with participation from earlier Context Relevant backers Madrona Venture Group, Bloomberg Beta, Vulcan Capital, and Seattle angel investors. The round was also joined by two Context Relevant customers, described by the company “as one of the largest banks and one of the largest insurance companies in the United States.”
“These organizations have made strategic decisions to not only use our technology, but invest in its wide deployment because it materially changes the game for their organizations,” says Purpura. They are remaining unnamed, he adds, so their competitors won’t know they’re using it.
Purpura, who has plied his data science skills on everything from Web search to politics to designing the best hamburger, began Context Relevant with the idea of creating software as a service that would put the capabilities of a data scientist in the hands of companies that didn’t have one on staff. The startup raised a $1.3 million seed round from Madrona and angel investors in 2012, and $7 million last July.
While Context Relevant does have customers outside of financial services, it has decided to focus on that industry, Purpura says.
Context Relevant helps financial services firms rapidly ingest and make sense of vast amounts of data in a variety of formats originating both inside and outside the corporate firewall in areas like bond markets and customer portfolios. Banks might use the capability to help identify the right product to offer a given customer at just the right time, Purpura says.
Most of the company’s target market is among the more than 300,000 Bloomberg terminal and data feed users, Purpura says. Context Relevant helps banks rapidly mix and remix that incoming information with the proprietary customer data they hold, and does so with an intense focus on security. (Earlier this year it announced a partnership with Good Harbor Security Risk Management, the consulting business of Richard Clarke, former White House senior advisor on cybersecurity and other national security issues, bolstering its credentials on this score.)
There’s a lot going on under the Context Relevant hood with machine learning and scalable distributed computing. This summary from the company’s Web site gets into some of the nitty-gritty: Context Relevant “automates feature engineering to produce a set of features that are used to train and optimize predictive models. The software automatically assembles algorithms to identify patterns across data stores and enrich the data store with new columns of data based on the patterns discovered. The enhanced data enables dramatic compression, greatly accelerating analytics.”
Purpura acknowledges that lots of companies are in the market right now with similar claims.
“Our [competitive] landscape is sort of a mess,” he says. “It doesn’t take a genius to figure out there are like 1,000 players that claim to be able to do this stuff. Each one of the financial institutions has to sort through them to tell which one is telling the truth.”
Context Relevant faced skepticism for this reason and offered customers a money-back guarantee to help win early business, Purpura says. No longer. “We’re just too busy to justify working with any money at risk now,” he says.
Today, the company’s biggest competition is from customers building similar capabilities internally. “These banks consider themselves among the smartest in the world at doing this kind of work, and they can do it themselves,” Purpura says, adding that Context Relevant can do it more efficiently.
The company has about 30 employees now in offices in New York, San Francisco, and Palo Alto, CA. Purpura aims to have hired 100 new people by the end of 2015, including New York-based specialists to help customers deal with ingesting data; data scientists and engineers to continue building on the product; and some sales and marketing staff.