By Liam Donohue, Managing Partner and Graham Brooks, Partner, .406 Ventures
“I’ve spent most of my career as a hedge fund analyst, and we are building the tool I always wished I had when I was researching businesses.”—David Plon, Co-Founder and CEO of Portrait Analytics
Since .406 began investing in enterprise data companies 16 years ago, we have believed that AI had the potential to transform almost every aspect of life. We made several vertical AI investments as early as 2006, and we made our first investment in Large Language Models and generative AI in 2014. So, it is in keeping with this long-standing thesis that in January, we backed the team at Portrait Analytics, a generative AI-powered start-up looking to disrupt – and revolutionize -- the investment research process. Since our initial round of financing, we are excited to share news of our continued participation in a follow-on investment led by our good friend Lars Albright at Unusual Ventures in May.
What is Portrait Analytics?
Portrait Analytics is an AI-powered summarization and research tool that takes over the critical, but rote work of acquiring and organizing data and therefore allows financial analysts to focus on the higher-value process of integrating relevant information into actionable investment theses.
In considering our investment in Portrait, we spoke to dozens of buy-side analysts and heard strong signal strength about three things:
- Information inundation: the amount of information available about private and publicly traded companies has exploded in recent years. In addition to all of the traditionally available public filings and news, investors are buying a blizzard of 3rd party data and integrating it with their own proprietary data. Organizing and prioritizing this information has become a significant challenge.
- Fear of missing something: despite spending half of their time reading through reams of public filings, earnings calls, research reports, and expert interview notes, most analysts live in fear that they will miss one small detail that will be the difference between a great win and a career-ending loss.
- Expanding coverage universe: pressure for efficiency in the hedge/mutual fund industry is forcing analysts to cover more names. Each new name covered requires an enormous amount of work just to get to a baseline level of knowledge.
The confluence of these factors puts analysts in an unsustainable dynamic and is exactly what led David Plon to start Portrait.
How is Portrait changing the game?
Portrait's proprietary, LLM-based core technology effortlessly ingests an unlimited amount of information about a given company in order to create highly accurate summaries, suggest non-obvious insights, tie key events derived from vast amounts of unstructured text to the structured financial and stock-price data, and address due diligence questions in plain English exchanges. Portrait’s hyper-intuitive UX, with its fast and distinctive "wow" features, seamlessly integrates into native workflows. While all of this combines to increase research analysts’ efficiency by more than 50%, the value of insights derived from the thoroughness of coverage can drive substantial ROI. Overall, we estimate Portrait to be playing in a $7B+ addressable market within the hedge fund, private equity, and mutual fund segments, with additional opportunities to expand the market to a broader group of investment professionals.
By increasing analyst efficiency and enabling more high-conviction investments, Portrait Analytics is poised to redefine the landscape for all types of investment research.
Portrait’s founding team of David Plon and Connell Gough come to the table an exceptional combination of lived experience and deep technical expertise. In particular, David’s connection to Portrait’s mission -- he created the company to address the overload problems he faced during his decade as a principal analyst at leading hedge funds like Baupost Group, Slate Path Capital, and Barclays – reflects a critical element of .406’s key criteria for backing generative AI companies below:
A founding team with:
- Deep subject matter expertise and direct experience with the problem the company is trying to solve
- A practical orientation, a willingness to push boundaries, and a desire to iterate and learn
A market that places high value on:
- Automating processes that drive real ROI in large, but highly specialized industries
- Building a unique trust-driven brand created by a superior technology, user experience, and business processes that engender user confidence in the completeness and accuracy underlying AI
A platform that:
- Has strong support from high quality and demanding ‘design-partner’ clients in the industry
- Complements .406 Ventures’ strengths in driving next-gen transfer learning and user adoption of generative AI solutions and shares our belief that humans are needed as part of the process (i.e. human-in-the-loop decision support) to build trust with users
Portrait’s leadership is a critical asset that positions it for success. In addition to his core experience and skills, David's strong connections and credibility within the hedge fund community have enabled Portrait to start off with the basic user trust necessary to rapidly scale the company. David’s partnership with Connell, one of the early generative AI innovators, solidified Portrait’s appeal.
Results from the first quarter working together
We were impressed with David’s and Connell’s competency, vision, and urgency prior to our investment -- and that has played out post investment. Since we closed our investment, Portrait has hardened its beta technology, hired a rock star technical team, built an impressive customer backlog, and put the MVP into the hands of early users. This early progress allowed us to introduce Portrait to Lars Albright at Unusual Ventures, who we thought would be an amazing partner to help build Portrait into the dominant company that it deserves to be.
So, today, we celebrate Portrait Analytics as the most recent of .406’s group of 21 pioneering AI investments and are excited to continue to be part of the company’s journey to transform the way financial analysts do their important work.
If you’d like to learn more about Portrait, please contact us or find out more here.
In the Founder’s Words, from David Plon, Co-Founder and CEO
WHAT’S PORTRAIT?
A Generative AI-powered research platform for investment analysts, aka, a personal research assistant
FAVORITE QUOTE:
"A leader has the right to be beaten, but never the right to be surprised" – Napoleon Bonaparte
BEST ADVICE RECEIVED:
Strong opinions, loosely held.
BIGGEST LESSON LEARNED SO FAR:
The classic Steve Blank line, “Get out of the building and talk to customers,” is spot on. Whatever the problem is, I always feel better after getting out of my own head and actually meeting with customers.
PAIN POINT ADDRESSED:
The tension of wanting to read everything in order to deeply understand a company and the industry context while also feeling constrained by time.
PROBLEM SOLVED:
Helping analysts discover and get up-to-speed on an idea in a fraction of the time it takes today, so that they can spend far more time doing what they love and what adds the most value: learning and thinking critically.
MILESTONE MOMENT:
Our first pilot customer signing a LOI based on our envisioned solution.
TECHNOLOGICAL INNOVATION:
Powerful AI + deep domain expertise + thoughtful design = transformative applications