PE shop Vista Equity Partners paid $100 million for 7Park to get in on the alt-data craze. Insiders told us how it's trying to juice business in an industry that's showing cracks.

Shayanne Gal/Business Insider

Alternative data's use is exploding, and so too are worries about a regulatory crackdown

• Vista Equity Partners paid nearly $100 million to buy alternative data company 7Park Data at the end of 2018. Since the acquisition, the firm has added to the sales team as it attempts to pivot away from selling the reports that the company was founded on.
• Sources tell Business Insider that 7Park added a "customer success" team after the acquisition that focused on selling machine-learning software for raw data instead of reports made by the firm's research team.
• The alternative data company has churned through senior leadership since the acquisition, however, losing COO Jim Sharpe, HR head Cori Weintraub, and data-science lead Ankur Patel in 2019.
• Click here for more BI Prime stories.

Alternative data's breakout year in 2018 brought interest from deep-pocketed investors hoping to cash in on the gold rush. But with new funding comes high expectations - particularly in the ultra-competitive and increasingly crowded world of alternative data.

7Park Data, an alternative-data seller founded in 2012, can attest to that. Business Insider has learned the New York-based company has seen executive shakeups and a big pivot following its acquisition by Vista Equity Partners in December 2018.

The New York-based startup built its brand collecting raw, unstructured data sets, such as credit card transaction data, and developing insights and research investors could use in their strategies. However, with the new ownership also came plans to expand beyond its roots as it looked to position itself as more of a software-as-a-service provider, helping clients better manage and analyze their own data with artificial intelligence-based products.

The transition comes as sellers of alternative data consider ways to expand or alter their business to stay ahead of the curve, or risk falling behind.

Former employees and industry sources paint a picture of a high-pressure environment following the change in ownership, where new hires had a short runway to succeed and veterans were given quotas far beyond their best previous performances.

Spokespersons for 7Park Data and Vista Equity Partners declined to comment on the record.

Sources say the firm was bought by Vista for nearly $100 million when it had roughly $15 million in recurring annual revenue. A presentation created by bankers from Raymond James on the company in fall of 2017 included a table that found the "near-term data pipeline" had the potential to be worth between $52 million and $64 million in annual recurring revenue.

The presentation also notes 92% of its revenue from hedge funds like Coatue, Citadel, Tiger, and Balyasny - a challenge for sales staff, a former employee said, because funds can cut ties at a moment's notice.

There has been a lot of turnover in the sales team, according to multiple sources. Throughout 2019, the business development team was a revolving door with at least five employees departing the team of roughly 12 people. Staff exits last year overall were on par with 2018.

Jim Sharpe, who joined 7Park Data as chief operating officer in June 2019, left the firm less than six months into his role and doesn't even list the firm on his LinkedIn profile. Cori Weintraub, 7Park's VP of human resources, is also no longer with the firm.

The data science team wasn't immune to the disruptive force of a new owner, either. Ankur Patel, vice president of data science, left the firm at the end of 2019 after a little more than a year. Patel is now working with a friend on an artificial intelligence consultancy, and in the process of raising money for another startup.

Sharpe and Weintraub did not return requests to comment in time for publication. Patel declined to comment on the record.

To be sure, key members of 7Park's management team have remained in addition to founders Brian Lichtenberg and Alex Nephew, who serve as CEO and president, respectively. Eric Christianson, 7Park's chief financial officer, and Nick DeSalvo, vice president of sales, have both been with the company since 2014. Rishit Shah, the chief product officer, joined in 2016.

A press release on a new product led by former GLG executive Sharpe, an alt-data marketplace called Discover, quoted the then-COO as saying he's "had multiple opportunities to build teams that drive growth from early stage to growth phase and beyond."

"I'm excited to bring that experience to bear as 7Park Data enters a new era, fueled by their partnership with Vista Equity Partners and the immense appetite for analytics-ready data to drive better business decisions."

Vista's track record

Sources who either spent time at 7Park or working with it point to its acquisition by Vista Equity Partners as a turning point for the alternative data company founded by Lichtenberger and Nephew in 2012. A veteran of the PE space, Vista, which was established in 2000, has more than $52 billion of investments in software, data, and tech companies.

In that time, the company has had its fair share of big wins. In September 2018, it sold Marketo to Adobe for $4.75 billion, netting over a $3 billion profit in just two years.

7Park Data represented Vista's first foray into the world of alternative data, and came at a time when the industry was peaking, leading mainstream players to take notice to the business of selling non-traditional data.

A week before Vista's announcement, Nasdaq acquired alternative data company Quandl. A few months later, data giant Bloomberg threw its hat into the ring as well, launching an alternative data marketplace. Fellow traditional data provider FactSet built out its own offering in 2018.

The rise in value of unique, unstructured data sets such as satellite images or web traffic came as Wall Street's appetite for all forms of data was growing. Previously of interest only to the most quantitative hedge funds, by late 2018 even fundamental firms were considering how incorporate alternative data into its strategy.

As a result, Lichtenberger and Nephew, who serve as 7Park's CEO and president, respectively, cashed in on the gold rush. The $100 million deal was the culmination of incredible growth for 7Park, which had raised a $6 million Series B in May 2017 at a valuation of roughly $41 million, according to PitchBook.

However, from the moment the deal was finalized, there was a noticeable shift in how the company operated. Employees were given quotas as much as double their best previous year, according to a former employee.

Alt-data's tough 2019

Higher expectations were coupled with a change in focus for the sales team in 2019, sources said, which had to begin selling software services and tools, while de-emphasizing the research reports that many had made their initial relationships based off of.

Several sellers of alt data had a tough 2019. Success has proved fleeting, especially as the market has become increasingly crowded. In September, Business Insider reported major departures, including the CEO, at alt data company Thasos.

Even the most veteran players have not been immune. Jefferies-owned M Science, one of the earliest sellers of alt data, faced major overhauls of its own and cut data-science jobs in December.

At the end of 2018, right before the sale to Vista, sources said the firm had roughly 130 financial services clients, which made up roughly 90% of the firm's revenue, all of which paid for the reports generated by the research team. Clients included hedge funds like Tiger Management, Citadel, Coatue, and Balyasny, sources say.

But in the new year, the focus, a source said, was to de-prioritize research, and focus on software. The new "customer success" team, led by Rebecca Gordon, focused on selling software like machine-learning tools, one person said, and helping Vista's other portfolio companies manage their data.

By the end of 2019 it had 130 customers in financial services, approximately the amount it had to started the year with, and roughly 7% less than 2017.

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