Kyle Bass Invests in Company Trying to Predict World's Next Big Trouble Spot

  • New York-based startup Predata closes its seed funding round
  • Capital to be used to hire more engineers, expand R&D

Kyle Bass, known for his contrarian bets against U.S. subprime mortgages and Chinese banks, has joined a $3.2 million initial funding round for Predata, a New York-based startup that uses data from online conversations to predict political volatility and risk.

Bass committed his own money independent of Hayman Capital Management, the Dallas-based hedge fund he founded, to join the seed round led by New Jersey-based investment firm Edison Partners, Predata said in a statement. Venture capital firms Chicago Ventures and Conversion Capital have also participated, the company said. None disclosed the size of their investments.

“Predata has predicted world events with admirable accuracy and foresight, including the Brexit outcome and test launches of missiles in North Korea," Bass said in the statement, calling the company’s product “an integral tool.”

Predata collects metadata from public conversations and comments online and uses that information to numerically prescribe the likelihood of volatile events in politics, financial markets and national security. The technology has so far anticipated attacks on oil facilities in North Africa, military provocations by Russian President Vladimir Putin, and large moves in currencies and interest rates, according to the company.

“The web is dense with hidden information that can be harvested to offer new insights into how key risk events will unfold, whether political campaigns, labor strikes, terrorist attacks, or even monetary policy decisions,” said James Shinn, Predata’s chief executive officer who had served in the Central Intelligence Agency before being appointed an assistant secretary of defense in 2006.

Shinn said the new money will be used to hire more engineering and sales talent, as well as deeper product research and development. Chris Sugden, managing partner at Edison, will join Predata’s board of directors.

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