The London-based startup, ChAI uses artificial intelligence (AI) and machine learning to predict commodities prices has announced to have secured £1.3 million (€1.5 million) in seed financing. The round was led by prominent venture capital investors including Passion Capital, Dynamo Ventures, MMC Ventures along with prestigious angel investors. The Brit company will use the investment to expand its team and global go-to-market activities.
So, how does it work?
ChAI uses uniquely valuable data sets such as satellite imagery and maritime transport data in order to offer unprecedented visibility and confidence into price fluctuations and movements of the world’s key raw materials, such as oil, aluminum, copper and others.
Further plans?
Only 10 months after founding the business, the co-founders of ChAI have raised a seed round of investment. The team, which has worked for a combined 50 years in pricing and trading commodities, 20 years in AI including academia and commercial enterprises, 20 years in insurance and 10 years in AI-focused early-stage companies, plans to use the new capital in order to expand its capabilities and already has four new team members joining this month, taking the total team size to 10.
Rather than simply establishing a minor competitive edge on speculative abilities, the company is combining state of the art AI with diverse and previously untapped alternative data sources to take the risk out of physical supply chains.
Ultimately, the company looks to demonstrate that its innovation will help customers to better mitigate shocks to company cash flows and P&Ls – thereby enabling businesses to plan and forecast more effectively and to be more resilient to market fluctuations.
ChAI Co-founder & CEO, Dr Tristan Fletcher, said:
At ChAI we’ve been tremendously encouraged by the near-instant and overwhelmingly positive response we’ve received to our methodology and predictions on commodities pricing. The inbound interest we’ve received for our “signals” and approach has been hugely validating and we look forward to introducing our services to many more companies in 2020. For this we’re excited to partner with such esteemed investors and business builders to progress our journey and take the company to the next level.
ChAI is differentiated through the fact that:
- The company leverages the latest in AI techniques: This allows ChAI to extract valuable information from data sets that are generated irregularly, are noisy and unstructured – and therefore difficult to consider and employ in traditional forecasting approaches.
- The company introduces and incorporates new data sources: Alongside established data sources such as standard market data and macroeconomic data, ChAI also utilises satellite imagery, maritime freight data, and political risk data to inform its price predictions. The use of these novel data sources enables ChAI to be one step ahead of other suppliers who are predominantly only using historical price trends for predictions.
- The company uses data sources flexibly: ChAI’s predictive model is built so that it supports a flexible use of data sets, meaning that it uses deep expertise in commodity markets to select only the most relevant data sets for each commodity to make its predictions. Furthermore, ChAI adds in any data sets that its clients wish to include based on respective proprietary theses.
- The company explains the outcomes generated by the model: ChAI is allergic to obscured or hidden proprietary algorithms. Therefore, it has built a fully explainable model which:
- Details the weight given to each input – For example, ChAI will clarify that it expects the price of a commodity to be at a certain level in the future, because of 5% due to currency movements, 20% due to warehousing stocks, 50% due to satellite imagery describing mining activity and 25% due to previous price action, or otherwise.
- Provides a full probability distribution for each prediction model, enabling clients to understand what the probability of a certain price movement will be at any given point in time from one day up to one year into the future.
ChAI’s points of differentiation and market leadership have been validated early on by securing early proof of concepts (POCs) and contracts with well-known global brands in beverages, construction, infrastructure and industrial manufacturers.
Eileen Burbidge, Partner at Passion Capital, said:
It’s rare and always a privilege to come to work with a team that has such a unique range of skills ranging from leading academia to strong commercial acumen. We at Passion were immediately drawn to the fact that many large companies and enterprises which rely on commodities in their supply chain are unlikely to staff their own proprietary desks to predict or anticipate price volatility, but will look for innovative and more accurate forecasts in addition to historical-based models. We’re excited to work with the ChAI team and look forward to their continued success.
Main image credits: ChAI
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