What kind of internal data can I repurpose for external sale? Five valuable types of alternative data

Demand for alternative data is growing at an exponential rate. According to an industry forecast earlier this year by California-based research and consulting company Grand View Research, the $7.2 billion global market  is expected to increase in size at a compound annual growth rate (CAGR) of more than 50% from 2024 to 2030. 

This is welcome news if you're looking to monetise your company's data through external sale. But what types of data are valuable to investors and therefore most likely to present a potential sales opportunity?

‍

The global market for alternative data is projected to grow at a compound annual growth rate (CAGR) of 50.6% from 2024 to 2030. —Grand View Research, Alternative Data Market Size & Trends

‍

In this post, we look to answer this question by running through five types of data that are currently in big demand amongst data buyers in the investment sector.

So let's get down to it.

1. Business-to-business (B2B) transactions

Information about purchases, sales and other financial transactions between businesses helps data consumers identify trends in the B2B marketplace, such as purchasing patterns and average order values. This can help a business:

• Optimise sales and marketing strategies
• Develop new and more effective pricing structures
• Learn more about the supply-chain landscape
• Improve inventory management

In addition, such data often serves as an internal aid to revenue projections, financial planning and forecasting – and has similar use cases externally. It's also attractive to investors as it helps them identify growth opportunities, map a public company’s expenses or analyse profits of a supplier company.

B2B transaction data is, at present, a blind spot in the data market, especially compared with consumer transaction data. So it could hold significant promise for external monetisation – in particular, for providers of procurement software, open-banking connectivity, invoice factoring services and supply-chain management solutions.

2. Opaque developing economies

Investments in developing countries often yield significantly higher returns than those in more established economies. But they also come with a much higher level of uncertainty. 

This is all the more so in opaque emerging economies such as Brazil, India and Mexico where transparency issues arise because of political constraints, the reliability of data or the availability of data altogether. In such cases, a seller may often be party to far more information than the investor, giving them the upper hand in any financial dealings.

This is why alternative data is so important to investors, as it can help them:

• Gain deeper insights into assets, liabilities, expenses, sales and profit margins 
• Understand search trends and how consumer behaviour differs from developing countries
• Make more accurate business valuations
• Identify investment opportunities and the risk to those investments accordingly

Those in a position to monetize such data are typically multinationals that maintain alternative data about opaque economies but have yet to realise its potential as an untapped resource. More specifically, these will likely be companies that handle data related to natural resource extraction, resource usage, domestic movement of goods and business transactions.

3. Chinese economic development

China is also an opaque developing economy. However, the country presents different challenges and opportunities, which makes it a special case for data buyers and sellers.

Companies in China operate in a tight and highly complex regulatory environment, making it difficult to access timely, accurate and complete information. Yet, at the same time, the Chinese market brings many benefits to investors. For example, it offers:

• A strategic location as a global manufacturing and export hub with a modern and well-connected transport system
• Access to a vast and highly skilled workforce at a significantly lower cost compared with Western economies
• Government support and incentives to attract foreign business investment
• An advanced digital economy that leads the way in technology and innovation

As a result, demand for data about the Chinese market is huge, especially relating to B2B transactions where information is all the more scarce and all the more valuable accordingly. 

Multinationals that hold this data are well positioned to fill the information gap brought about by the unique circumstances in the country.

Furthermore, new rules, which came into force in March, have eased cross-border data transfer. This could open the door to more potential data vendors. All the same, they still need to remain vigilant of the compliance implications of selling their data to avoid falling foul of Chinese regulation.

4. Freight transport

Alternative data harvested from shipment systems is another keen area of interest for a variety of data buyers, especially from airfreight where there’s still a significant shortage of available data. Shipment data can offer a range of insights for data buyers looking to invest both inside and outside the logistics sector.

For example, it can provide insights into:

• Shipment volumes
• Routes and transit times
• Utilisation levels and available capacity
• Costs and pricing patterns
• Optimal booking times
• Carrier reliability

On a more strategic level, it can help investors track performance, understand seasonal dynamics, explore new revenue opportunities and analyse worldwide markets and trends.

Potential vendors of alternative data include software companies acting as data processors for the logistics industry, satellite imagery providers, port operators and import-export companies.

5. Investor activity

Alternative sources of information, which complement traditional material such as financial statements and market intelligence reports, are helping to transform the way  companies in the finance sector make investment decisions.

These new forms of data are giving them fresh insights and perspectives, helping them to see a wider and more accurate picture across the market landscape.

Exchanges and related services, such as companies that run the infrastructure of the trading industry, generate vast amounts of this investment information. They're therefore well placed to repackage this as a product to meet the soaring demand from data-driven investors.

However, data-selling opportunities aren't just restricted to companies in the capital market ecosystem. This is down to demand for complementary datasets that offer insight into retail investment sentiment. Such data is derived from sources that include:

• Social media platforms, such as StockTwits
• Online forums and message boards, such as Reddit
• Search query exploration tools, such as Google Trends
• Gated online communities dedicated to professional investors, such as SumZero

Start your monetisation journey

This post is intended to help you unlock the full potential of your data inventory by introducing you to some of the types of data that investors are looking for. But this is far from an exhaustive list. For example, datasets that contain information about machinery usage and purchasing patterns, healthcare and consumer and B2B transactions in Japan are equally valuable to the investment community.

However, be aware that finding the right information within your knowledge base is only the start of your data monetisation journey.

That's why it's so important to seek professional advice from the outset. Because this will help you avoid the many pitfalls involved in selling your data – from data quality and compliance issues to properly marketing your product to potential buyers.

‍