DataSift Raises $15 Million to Help Traders Mine Twitter Posts

Photograph by MedicImage

DataSift is one of three companies that is authorized to resell the full "firehose" of tweets, according to Twitter's website.

Stock traders look for an edge anywhere they can, and now they’re searching for clues within the half a billion Twitter messages published every day on any subject imaginable.

One startup helping them filter all that information is DataSift, a four-year-old company started in the U.K. The company said it raised $15 million from investors including Scale Venture Partners to increase the number of analytics tools it offers customers. Northgate Capital and Daher Capital also invested in the round.

Banks have been flocking to DataSift’s subscription service, because the company is one of very few that has permission to access and resale data from Twitter’s so-called firehose, the entire bulk of postings made on the network. Since DataSift introduced a product for financial firms in September, customers have been using the software to gain insight into sentiment around companies ranging from Facebook to Research In Motion, and determine how that influences stocks or correlates with price movements, said Rob Bailey, DataSift’s chief executive officer.

“Customers across a wide range of veriticals are getting more sophisticated with what they want to do with social data,” said Bailey. “We’re ramping to keep up with demand for what we do. We’re finding ourselves being asked more and more by different customers to do more stuff with our platform.”

With the new capital, the company plans to hire engineers and develop technology that allows clients to send information from their internal social networks to DataSift so it can be filtered just like public data from Twitter, Facebook and blogs.

Bailey said the company isn’t at liberty to offer names of financial services customers, because they tend to be secretive about their strategies. DataSift also works with business intelligence firms and social media marketing companies. Subscriptions range from $3,000 to $15,000 per month, according to the company’s website.

DataSift has 60 employees in four cities: San Francisco, Chicago, New York and Reading, England. Bailey expects headcount to about double in the next 18 months as the company expands its technology to deal with more data sources. Rory O’Driscoll, a managing director at Foster City, California-based Scale, is joining DataSift’s board of directors. O’Driscoll is also an investor in online collaboration service Box and e-mail marketing provider ExactTarget.

DataSift’s relationship with Twitter predates its inception. Nick Halstead, who founded DataSift, created a Retweet button for his TweetMeme website.  DataSift has been working to diversify its information sources and provide a more comprehensive view of discussions across the Web. Less than half of its data now comes from Twitter, with the rest from Facebook, blogs and forums.

DataSift isn’t alone in mining Twitter and other social-media sites for valuable data. Gnip and Topsy Labs are the other two companies certified by Twitter to resell data. About 10 other companies are certified to use data to help companies analyze information and communicate with customers. Dataminr, which provides analytics to the U.S. government and financial industry, raised $13 million in September.

What do you think about this article? Comment below!