Written by Cindy Gamal.
We recently formed our latest fintech venture, AI TradeDesk, which serves the investment management market.
We’re excited about this venture because of its strong “Why now?”. The financial industry currently sits at a critical juncture. Asset managers rely on data to gain an edge and beat the market, but traditional data analysis methods can no longer keep pace with the volume of unstructured data out there. Recent advances in AI, particularly in large language models (LLMs), present a unique opportunity to revolutionize how portfolio managers interact with market data to make better investment decisions.
But building a product with market impact requires more than just a great idea. It takes a structured approach to problem identification, solution validation, market analysis, and business model design.
Here’s the step-by-step of how we validated this opportunity:
Finding the Problem
At this stage, we are very conscious of not bringing our own biases into conversations and implementing the ‘Mom Test’ in the customer discovery process. Our commitment was to better understand the pain points of portfolio managers. If you bring your biases in, you risk misinterpreting which problems are critical and building a product that doesn’t resonate with the market or gain traction.
Through in-depth conversations with industry professionals, we discovered that portfolio managers spend an average of 3-4 hours each day processing unstructured data before giving up as the volume is too high. The high volume and mission-critical aspect of the analysis, coupled with high costs per analyst, made it clear there was a human bottleneck in the system.
Validating the Solution
OK, we’ve got a problem. Now, we need to design a solution that is 10x better than anything else out there. We do this by mapping out customer pain (too much unstructured data), customer jobs or target outcomes (making investment decisions that beat the market), and the value proposition needed to help them achieve their goals. We aligned this value proposition with the technical capabilities AI can unlock to build the core idea of AI TradeDesk. Our solution integrates various data sources, summarizes and contextualizes the information, and offers real-time insights. In short, we use AI to turn a human analyst into a 10x super-analyst.
To validate this concept, we conducted a technical feasibility assessment, especially on the critical components of data aggregation, summarization, and interactive querying, to ensure that the technology could deliver what our users need.
Finding the Buyer, Channel, and Pricepoint
Most products we launch are likely the first product of the company, with future add-ons we can’t foresee, but to get off the ground, we only need to find one customer segment through one channel. Instead of trying to “boil the ocean” and serve every potential customer, we aim to reach, close, and serve our innovators and early adopters really well. If you spread your efforts too thin, you risk burning through resources without securing a strong initial customer base needed for your next stage of funding.
Here’s how we did it:
- Honing in on the initial target customer segment: We identified medium and large mutual and hedge funds as our starting point, given their reliance on data and trends for decision-making.
- Validating channel paths to customers: Through multiple outreach experiments aimed at thousands of prospects, we identified which channels were ineffective and which successfully reached senior decision-makers at investment firms.
- Finding the pricepoint: Pricing can be anchored to competitors, cost-based to achieve margin, or value-driven. We researched other tools that customers regularly buy, analyzed the human cost of performing the same job manually, and calculated the potential untapped revenue our product could unlock for customers.
Calculating the Market Potential
Even a great founder can’t build a great business in a bad market. Yet many startups avoid doing detailed market sizing, build anyway (ugh), reach product-market fit (yay!), and fail to get capital because their market is too small. The result can be a near unsellable and unfundable lifestyle business – which can be a good business but not the kind of venture we aim to start.
To ensure our businesses have the option to raise downstream capital, we take market-sizing very seriously. We conducted a bottom-up analysis to calculate our total addressable market. We focused on the initial target customers of medium and large mutual and hedge funds. These firms represent over 10,000 potential customers and a total market potential of exceeding $500 million based on our pricing work. This market sizing reinforced our belief that AI TradeDesk has a significant growth opportunity, even just within our initial target segment.
Reviewing the Competitors
Finding a problem doesn’t mean finding a business. It’s possible to get started and then run into a 400-pound gorilla that blocks your path—dominant competitors with resources that make it difficult to gain a foothold.
To avoid this, we always conduct a detailed competitive analysis. We identified two main types of competitors: information providers like Bloomberg and Refinitiv, and AI-powered insight generators such as AlphaSense and Sentieo. We found some unique advantages we can’t talk about here, that our competitors either don’t offer or only partially deliver and have a disincentive to do so.
Confirming the Market Interest
Before advancing any venture to the “Formation” stage, we require it to secure signed Letters of Intent (LOIs) from potential customers. This approach gives us confidence that we’re building a solution with actual market demand—not just a theoretical one.
This market was tough to sell without a product as the common buying pattern is to get a free trial of an insight product to see if it works for you. Despite not having an MVP, our team secured a design pilot with a $500 million AUM fund based on the value proposition alone. Between this and other commitments, we’ve got ample signal of interest.
After evaluating all the factors above, we concluded that AI TradeDesk represents a strong business opportunity with the potential for significant growth and industry impact.