VanEck Invests in Generative AI Startup FinChat, Betting on the Future of Investment Research
The race to integrate generative AI into the world of finance is heating up, and VanEck, a New York-based investment management firm with $119 billion in assets under management, is making a bold move by backing a Toronto-based fintech startup called FinChat. VanEck has invested $1.5 million in FinChat through its venture arm, VanEck Ventures, and is also adopting FinChat’s AI-powered investment research software for its employees. This partnership reflects the growing interest of traditional financial institutions in leveraging generative AI to enhance efficiency, accuracy, and decision-making in investment research and client service.
FinChat, launched in 2023, is a global equities research platform that utilizes generative AI to assist investors in analyzing data, generating reports, and creating presentations. The platform operates similarly to ChatGPT, allowing users to input questions or prompts and receiving detailed answers, charts, and other outputs. FinChat aggregates both public and private datasets, including earnings presentations, SEC filings, and proprietary data, to provide comprehensive insights for investors. The startup has already shown promising growth, with over $2.5 million in annual recurring revenue and a 15% month-over-month growth rate.
How FinChat Works: Revolutionizing Investment Research
At the heart of FinChat’s value proposition is its ability to simplify and accelerate the investment research process. For instance, tasks that previously took analysts 30 hours to complete, such as building detailed financial models or generating investment summaries, can now be accomplished in as little as 30 minutes using FinChat. The platform allows users to input prompts, fetch relevant data, and generate outputs such as slide decks, one-page memos, or consolidated financial reports. This not only saves time but also enables analysts and sales teams to focus on higher-value tasks like strategic decision-making and client relationships.
FinChat’s AI capabilities extend beyond individual tasks to user-generated automated workflows. Analysts can save specific prompts and reuse them for similar projects, creating a library of reusable templates for reports, presentations, and other materials. For example, an analyst creating an 8-page summary on Spotify’s competitive advantage can save the prompts used and apply them to analyze Apple Music or Tidal. This level of customization and efficiency is a game-changer for investment firms looking to streamline their operations.
VanEck’s Vision: Enhancing Efficiency and Client Service
VanEck Ventures’ General Partner, Wyatt Lonergan, is optimistic about the potential of FinChat to transform the way VanEck’s employees work. Lonergan believes that the platform will not only save time but also give VanEck a competitive edge in selling products like equities ETFs and potentially even crypto funds. For instance, VanEck’s sales team can use FinChat to quickly answer client questions during calls, such as identifying the underlying assets in a specific ETF. This ability to provide real-time, data-driven responses enhances the client experience and builds trust.
One of the most impactful use cases for FinChat at VanEck is in comparative analysis. For example, the platform can help build slide decks comparing VanEck’s semiconductor ETF, which has $22.6 billion in assets, with similar products from competitors. This process, which once involved manually pulling data, building charts, and compiling information into PowerPoint, can now be accomplished with a few simple prompts. FinChat also makes it easier to share analysis with clients by aggregating data into a single link, further streamlining communication.
The Technology Behind FinChat: A Blend of AI and Financial Expertise
FinChat’s success is driven by its robust technology stack, which combines generative AI models from leading providers like Anthropic, OpenAI, and open-sourced models. This approach allows FinChat to avoid reliance on a single provider, ensuring that the platform remains at the cutting edge of AI innovation. The startup regularly evaluates the quality, speed, and cost of responses from different models, dynamically routing prompts to the best-performing model for specific tasks. For example, FinChat found that Anthropic’s Claude model excels at transcript summarization, while OpenAI is more effective at analyzing certain companies.
In addition to its AI capabilities, FinChat leverages a combination of public and proprietary data sources, including earnings presentations, SEC filings, and company-specific KPIs. The platform is also working on integrating enterprise clients’ internal data, with this feature expected to launch by summer 2023. This ability to pull in external and internal data sources makes FinChat a versatile tool for investment research and client service. The platform’s user-generated automated workflows further enhance its utility, allowing analysts to save and reuse prompts for common tasks like investment committee decks and financial summaries.
The Future of Work in Finance: Augmenting Human Expertise with AI
Despite its transformative potential, FinChat’s founders emphasize that the platform is not intended to replace analysts but to augment their capabilities. The goal is to automate repetitive tasks like data aggregation and paperwork, freeing up analysts to focus on what they do best: thinking critically, making strategic decisions, and building client relationships. As Braden Dennis, FinChat’s cofounder, puts it, “Let’s save the paperwork for the robots and the thinking and collaborating for the humans.”
VanEck’s investment in FinChat is just the beginning of what promises to be a long-term partnership. The firm is already exploring ways to leverage FinChat’s technology across its product lines, including crypto funds, where generative AI could help analyze blockchain data and identify investment opportunities. With its focus on innovation and efficiency, VanEck is positioning itself as a leader in the next generation of investment management, where human expertise and AI collaborate to drive success. As the financial industry continues to evolve, partnerships like this one between VanEck and FinChat are likely to redefine the future of investment research and client service.
