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Fortune
Fortune
Luisa Beltran

AI research firm AlphaSense to buy rival Tegus—only months after filing patent lawsuit

(Credit: SOPA Images / Contributor)

Tegus, an AI research startup that was valued at $3 billion in 2021, is close to a deal to sell itself to AlphaSense, according to five banking and venture capital executives. The financial terms were not immediately available, but the combined companies will be valued at roughly $4 billion, one of the VC execs said.

Tegus has been up for sale since last fall when it hired advisors, one of the bankers said. Based on the executive’s comment about the combined value of the firms, the sale price for Tegus is around $1 billion—though this is only an estimate and has not been confirmed.

It’s unclear if negotiations to carry out the deal started before or after AlphaSense sued Tegus for patent infringement in September. 

In the lawsuit, AlphaSense claimed that “the user interface of the Tegus Platform is remarkably similar to the AS Platform in terms of purpose, functionality, and even aesthetics,” and accused Tegus of infringing on seven patents related to its AI platform. On May 8, the parties resolved the litigation but gave no reason why, according to a redacted version of the stipulation and [proposed] order staying the case.

“Tegus has been in the market for a while,” the banker said. 

Tegus and AlphaSense could not be reached for comment.

AlphaSense and Tegus are competitors, both serving similar markets. Twin brothers Michael and Thomas Elnick founded Tegus in 2017. The Chicago company provides market intelligence and data to financial services companies, including investment firms, investment banks and consultancies. 

Over 2,500 asset management firms use Tegus, which has raised $111.5 million in funding, according to Crunchbase. In 2021, Tegus snagged a $3 billion valuation when it collected $90 million in a funding round led by Oberndorf Enterprises and Willoughby Capital.

AlphaSense is an older firm, founded in 2011 by CEO Jack Kokko along with CTO Raj Neervannan when both were classmates at the Wharton School. Kokko and Neervannan sought to “marry the burgeoning technology of artificial intelligence with research about companies,” Fortune reported in April. AlphaSense now boasts more than 4,000 corporate customers, including more than 80% of the S&P 100, the story said.

AlphaSense, of New York, has raised $770.1 million in funding, Crunchbase said. Investors include Goldman Sachs, CapitalG and Bond. In September, AlphaSense was valued at $2.5 billion when it raised a $150 million round.

Tegus and AlphaSense both received “very silly valuations,” said one private equity executive.  

The companies operate in the sector called “expert network,” which was invented by the Gerson Lehrman Group nearly 20 years ago, said one VC, who is a Tegus customer.  When an investment firm wants to invest in a new sector, they will often call a firm like GLG or Tegus to speak to an expert in that sector. For example, if a VC wants to invest in medical devices, these companies will usually arrange calls with experts such as doctors or long-time executives in that field. 

Customers agree to allow Tegus to record the calls and create transcripts that are kept in an online repository where it can be viewed by other customers. (Tegus does remove the names of the customers and any employees, according to the company’s terms of use.) In April, the Tegus library had more than 100,000 expert transcripts available.

"This was [Tegus's] take that spiced it up,” the VC said.

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