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The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Talking Reference Data with Andrew Delaney – The Curse of Approved Supplier

We were saddened to learn earlier in the summer of the demise of Hyper Rig, a pioneer in the area of risk aggregation. To us, Hyper Rig’s commercial offering seemed as close as one could get to meeting practitioners’ stated requirement for a means of deriving risk measurement/management information from the broad range of relevant data from across the enterprise.

The offering seemed to match what practitioners are describing to us as the Holy Grail: the ability to collect and integrate pertinent risk, position and market information into a single point of contact for risk management.

So what went wrong?

The Report to Creditors and Members issued May 30 makes for interesting reading.

Hyper Rig was in fact the marketing vehicle for CKlear, owned by Hyper Rig CEO Michael Coleman, which held the intellectual property for the risk aggregation platform. The company began trading in 2009 and managed to generate profit of £150,000 on revenues of more than £800,000 for fiscal 2010.

Despite the termination of a contract with Barclays Capital in late 2010, the firm secured paid-for trials at Credit Suisse, Deutsche Bank and Royal Bank of Canada, among others, with the prospect of some £2.5 million of revenue.

Based on this interest, the company embarked on a fund raising exercise in 2011, with commitments of between £1 million and £2 million, contingent on closure of a platform sale to one of the these prospects. According to the report, due to the ongoing problems in the Eurozone, budgets among triallists were frozen until February 2012 at the earliest.

Having struggled through 2011, the firm managed to gain interest from Royal Bank of Canada, which at the beginning of this year looked set to commit to a £800,000 contract. Moreover, an investor had also announced plans to deploy the system along with two of its customers.

Things were looking rosy, but a dispute among the shareholders – a minority shareholder sought to liquidate his holding – led to a statutory demand being served on the company in April. Funding and client interest unravelled from there.

That a shareholder dispute could lead to the downfall of a provider of a mission-critical function like risk aggregation speaks to the broader issue of scale. Financial institutions – today more cautious than ever – are nervous of buying from smaller players, no matter how visionary.

No-one got fired for buying IBM, as they say, and the curse of the ‘approved supplier’ list hits smaller, innovative companies everywhere. Hyper Rig seems to have paid the ultimate price.

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