Two Sigma, Goldman, and Citi invested $41 million in data startup Crux Informatics. But the past 12 months has seen the startup churn through execs as it looks to solve Wall Street's data woes.

Samantha Lee/Business Insider

Crux Informatics nabbed over $40 million from some of Wall Street's biggest players.

• Crux Informatics raised $41 million from the biggest names on Wall Street, but struggled to develop the product it promised Two Sigma, Goldman, and Citi, several sources familiar with the situation tell Business Insider.
• Several executives, including co-founder Elizabeth Pritchard, have left the start-up in recent months, while the hiring of CTO Mark Etherington has dramatically overhauled the firm.
• Now, Etherington and his team are revamping its product, sources tell Business Insider, as the firm closes its San Francisco office and moves into larger digs in New York.
• Philip Brittan, cofounder and CEO of Crux Informatics, told Business Insider that while the team has changed, the start-up is still on track, adding both clients and features since the product when live in March 2019.
• Visit Business Insider's homepage for more stories.

For Crux Informatics, raising money was never the hard part.

It took less than 12 months for the startup to nab $41 million from some of the biggest players on Wall Street. But while attracting millions from the likes of Goldman Sachs, Citi and Two Sigma didn't prove to be difficult, delivering a product that does was, Business Insider has learned.

The New York-based startup aimed at helping firms manage how they digest and process data has undergone significant changes to both its technology and executive leadership, according to 10 former employees and sources familiar with the situation.

That's included the shuttering of a San Francisco office that originally served as the center of the startup's tech development along with several senior-level employees leaving.

Elizabeth Pritchard, a cofounder who was serving as Crux' head of go-to-market, left in September 2019, according to her LinkedIn.

Additional senior exits in 2019 included the head of data engineering (Kesh Iyer), chief architect (Ben Frank), vice president of product (John Kelly), and chief software engineer and API team manager (Ben Upsavs). C-level departures bled into 2020 with Jonathan Major, Crux' head of information security, leaving as well.

The demand for a company to serve as the "plumbing" for the data financial firms ingest is obvious, as Crux' blue-chip investors prove. But the technical ability to create this type of service is one of the hardest problems to solve in the industry, sources inside and outside the firm say.

Now, with a new CTO in tow and new offices near Grand Central Terminal in New York, Crux is hoping to add thousands of datasets to its steadily improving platform, which it's "hoping to take to the next level," CEO Philip Brittan told Business Insider. Currently the platform, which connects data providers to data consumers like Goldman and Two Sigma, has 270 million data files on it.

"We're humble enough to know that we don't know everything," Brittan said.

But, Brittan stressed, the firm is on track to do what he says it originally set out to do - become a utility for the industry and create the pipes for finance companies in need of data, even if the product is constantly being changed.

"In two years, it might look completely different," he added

Crux raised $41 million on the belief it could help firms handle data

Crux Informatics first entered the public purview in November 2017, announcing a $10 million Series A led by Goldman Sachs Principal Strategic Investments. The pitch was simple: as Wall Street becomes more of a data-intensive industry, there is real value in helping firms access the information they need in a way that's easy to use.

The initial idea, according to Brittan, was to focus on helping firms process and manage both foundational data, like pricing info, and alternative data - the complex, unique datasets that many on Wall Street were just beginning to grasp how to appropriately use.

Cofounders Brittan, who held senior roles at Bloomberg, Google, and Thomson Reuters, and Pritchard, who spent nearly 20 years at Goldman Sachs, brought with them a deep understanding of Wall Street's use of data.

"The emergence of unstructured data as an important input into the investment process creates a great opportunity for financial institutions, but only if actionable insights can be extrapolated from it," said Darren Cohen, the global head of Goldman Sachs' Principal Strategic Investments group, in a release announcing the news. "Crux' innovative approach - coupled with their deep expertise in financial services and capital markets - brings economies of scale that will allow companies to be more agile, inventive and effective with data."

More money would soon follow, as the startup raised an additional $31 million in less than 12 months. A strategic investment from Citi of $11 million came in March 2018.

In September of that same year Two Sigma entered into a strategic partnership with Crux as well, making a minority equity investment. The following month, the startup announced the hedge fund had led its $20 million Series B, which included follow-on investments from Goldman and Citi.

The addition of Two Sigma brought with it a "focus" for the product, Brittan said. The quant fund was "very engaged and very demanding, but in a good way," he said, and eventually gave the sign-off for the launch of the product in March of last year.

Citi, Goldman, and Two Sigma declined to comment on the startup, but the three Wall Street titans are still involved with the company. Goldman's Cohen is still on the board, and Tom Hill, the legendary kingmaker in the hedge fund industry who built up Blackstone's hedge-fund investing arm, joined the board in April of last year - right after it was announced that he would be working as a consultant with Two Sigma.

Strategy changes, employee turnover, culture changes

The tech backing the product, however, was underwhelming, several industry and company sources said.

Initially, the majority of the development of the tech was done out of Crux' San Francisco office, which was made up of employees from Incapture Technologies, an enterprise software company Crux acquired in the fall 2017. Brittan said Crux bought Incapture to serve as a boost to the startup early on, with the goal of having most the tech work done there while the New York office would serve as the client-facing hub.

Incapture's former CEO, Larry Leibowitz, says on his LinkedIn that the company's "IP spun off to form Crux Informatics." Leibowitz's LinkedIn profile currently states that he is a strategic advisor to Crux and on the board.

The issue with many of the engineers in San Francisco, according to several sources at the company, was that they were not familiar with financial services firms and how they operated. The firm spent 2018 talking with industry participants, raising money, and determining what the platform would look like, Brittan said.

Sources say that the struggling tech prompted the board to push Brittan to hire a CTO, a role he had been doing himself since the company's founding, though Brittan said he was happy to bring on someone for the role, and interviewed roughly 20 candidates.

The eventual hire - Mark Etherington, a former executive at Thomson Reuters and Goldman who'd most recently served as the global head of trading technology at Refinitiv - was recommended by a board member, Brittan said.

Sources familiar with the firm say the addition of Etherington as CTO changed the company. With the tech originally built for places like Two Sigma, the firm was struggling to grow its client base beyond its investors, sources said.

Brittan said the firm has clients from the biggest hedge funds to small start-ups, though declined to name any beyond the investors that are already public about working with Crux.

'Takes a little while to find the right team'

Etherington's hire started a strategy revamp, which included stripping down a lot of the firm's technology, several sources say.

Brittan states while Etherington's team has increased the efficiency and added features to platform, it hasn't changed drastically from what was rolled out in March 2019.

He said when Etherington joined, he looked at the product and told Brittan "it's basic, it needs work, but it's pretty good."

Etherington's arrival led to him bringing in his own team and placing them in New York, sources said - often in similar roles to what people were already doing in San Francisco.

There was a lack of trust in what the original team had built from the Etherington's hires, several sources told Business Insider. Brittan said Etherington and his team have rewritten chunks of code to improve speed and efficiency.

By late 2019, the San Francisco office was shut down with the New York team relocating from its Park Avenue offices to a bigger space in Grand Central. Brittan said roughly a quarter of people in that office transitioned to New York.

"It was a really tough decision, but it made sense for the business" to move the engineering teams to one office, he said.

Still, that hasn't stopped the company from looking to expand. Crux recently moved into a new office space at 10 Grand Central that the firm hopes to grow into.

Brittan characterized this turnover as nature of a start-up. "It does take a little while to find the right team," he said.

He is confident in the position of the start-up though and its purpose.

"We think it's a valuable and needed service," he said.

"The core way of how [the product] works hasn't changed."

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