The AI That Beats the S&P 500: In Conversation with FINQ CEO & Founder Eldad Tamir

On today's episode of Startups On Demand, I am joined by Eldad Tamir, CEO and Founder of FINQ – an AI-powered investment platform for everyone, where big data and science replace the biased human intermediary.

Today, Eldad talks about how FINQ has revolutionized the FinTech and investment landscape and explains how this AI has beaten the S&P 500 through data collection and analysis.

Omri: Thank you so much for being here today, Eldad. I want to start a little bit for the audience in the US that doesn’t know all about you because here in Israel, you’re a big-time celebrity. Tell us a little bit about your background

Eldad: I started my career as a student at the University so that’s almost like everyone else. Then I had this bit of luck that I started working in one of the first-ever venture funds in Israel. It was really the beginning of the industry a long time ago, sometime in the mid-80s. 

I then did my masters at the MBA and I really enjoyed the wealth of information of really understanding the high-tech business in Israel. I also did some managing consulting work later and lectured at the Tel Aviv University of Finance. I started Tamir Fishman 20 years ago and grew that up to be a big business here doing both Investment Banking and Investment Management. 

I also participated in the local Shark Tank in Israel. I do a lot of media in Israel, kind of explaining to people what’s going on in the capital markets in the economy. So you know, it’s always hard to translate financial economic issues into something people understand, for some reason. The language is still kind of old. So I’m having fun, and generally, that’s amazing. 

Omri: There aren't a lot of people who started in venture and made the shift into the capital markets. How come you made that transition?

Eldad: I like to do a lot of things. You know, a venture by itself is not as interesting. People who know me know for a fact that. Venture is one part of investing. There are many, many other fixed income and equities, hedge funds, and tons of products out there on the market, and venture is quite a small niche with a lot of PR. I always say I entered the investment world through venture, but that was not enough for me, because there are many many other products out there.

Omri: How did Tamir Fishman start?

Eldad: I went to management consulting, and from there, I went to a company named Evergreen. It’s a well-known firm here and I started doing everything, like building the first asset management company and venture fund and creating a lot of affiliates with US-based companies for the first time in Israel. So I brought US companies to work in high-tech here in Israel and then I left. Consulting is really not good enough for me because to tell other people what to do, usually they do nothing with it, and so it’s not satisfying. And then I went to work for one big investment company and I realized that it was not for me, because 90% of the time, it’s politics. Then I went to start my own kind of Investment Bank or investment house, whatever you want to call it. I wanted to do my own thing in the early days.

Omri: Let's talk about FINQ. Now, there's an AI that's beating the market. Can you talk more about that?

Eldad: It’s like I had that vision for ages because I had my career both in capital markets investing the venture fund. Some people say fintech. But really, nothing happened in fintech. You know, transferring money through an application is not fintech. Fintech is combining those two worlds to create a third world, but if you look at the market today, fintech really is irrelevant because it doesn’t really help the clients. There’s almost nothing. Even the robo-advisors are kind of an extension of the old world. 

So what we have created with FINQ is really a revolution. A revolution in terms of how we all utilize finance, like the same revolution that happened in many other industries. Like the way we take vacations, right? Once you called a travel agent, you would do practically what they told you to do, right? You need to have trust, right? Not in the data, but in the person. Was that trust based on data? No. And this whole industry changed, right? Today, you look at data to decide which vacation spots you want to take. 

In the financial world, everything is still like in the 20s – there's no change, right? Nothing really happened. There was a need and a huge market. Then we looked at the analog world – what does work for people who have money? And it’s like the family office model where people don’t buy products from the salesperson. Instead, you go to the family office. They do the gathering of limited data and then tell you what’s good and what’s not good. They have this supervision over the products and they tell you when to buy and they know what your goals are. That’s what we’re doing: a digital family office for the masses. 

AI really is the technology that’s needed here because we have to process tons of data. We have to know what the client wants, and by combining that, we create a lot of value for the customer. Now, it’s based on data. It’s based on science. And if you think of it, it will do better than any other family office. It will do better than the biased salesperson, the biased insurance agent, or the biased bank clerk, by definition almost. So it’s really fun.

Omri: Let's talk technical – how does FINQ's AI work?

Eldad: I can tell you for sure that we are the biggest collector of equity market stocks, bonds, and funds in the world today. When we collect data, we put them in three families. Each family has a lot of branches, but to simplify it, we collect what we call professional data. Professional data is data from professional people who know the market like research analysts, hedge funds, and people who analyze stocks and capital markets. But we don’t collect just one data – we collect all the data. So it’s not like one smart person telling you something, and if you think of it, if you get one smart person, you’re still gambling, right? But if you get 10,000 people who know a specific stock and talk about it and have their insights on it, you probably will get it right 90% of the time. It’s a huge difference. So we collect data from the professionals. We collect what we call data from the masses, from not-too-professionals because they also move markets, right? We need to know what the street thinks so it doesn’t matter if it’s right or wrong. It influences the market. 

This is the New World. The street power now can be measured. I don’t have to think about it or to ask about it. I can give you a digital number each day, each minute about each stock and what the street thinks about it. Then obviously, the third factor is the company itself. Data that comes out in reporting in a company. We don’t just take the data as it is. We put it into our hundred algorithms and check them and see what works and what doesn’t work, and once we take all that data and put it together in machine learning and AI, you get science. 

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