The Growing Role of Alternative Data in Investing

Alternative Data Enters the AI Era

According to a recent Lowenstein Sandler report, alternative data use is accelerating, transitioning from a niche tool into a core part of investment strategies. Hedge funds, private equity firms, and venture capital funds increasingly rely on alt data to enhance decision-making, optimize portfolios, and improve due diligence.

• Adoption of alternative data is accelerating, with 67% of investment firms now using it, up from 31% in 2022, and 94% planning to increase their budgets in 2025.

• The global alternative data market was valued at $9.28 billion in 2024 and is projected to surpass $635.34 billion by 2034, growing at a CAGR of 52.60%.

• North America leads this market, accounting for $6.31 billion in 2024 and expected to grow at a CAGR of 52.72%.

With the integration of artificial intelligence, alternative data is becoming even more valuable. Investment firms now process exponentially larger datasets, enabling them to extract insights faster and more precisely. Workforce intelligence, in particular, has emerged as a valuable alternative data type, providing insights into corporate health, hiring patterns, and workforce efficiency.

Want to stay ahead of the market? See how Aura Intelligence provides real-time workforce insights to give investors a competitive edge. Request a Demo Today!

Workforce Data: A Key Driver of Modern Investment Strategies

Investment professionals are leveraging hiring and operational workforce data as an early indicator of company performance. Traditional financial reports and analyst projections often lag behind real-time business conditions, while hiring, attrition, and workforce sentiment data can signal corporate trends ahead of earnings releases.

Essential Workforce Insights Investors Use for Smarter Decisions

• Hiring and attrition trends to predict growth, stability, or distress

• Talent flow between companies to reveal competitive shifts

• Skills evolution and workforce composition to assess innovation potential

• Geographic expansion trends to identify new market opportunities

• Employee sentiment to gauge management effectiveness and organizational stability

Why Alternative Data is No Longer Optional for Investors

Predicting Financial Performance with Workforce Analytics

As Yahoo Finance's premium product, which includes certain hiring data, demonstrates, there is growing interest in alternative data even among retail investors. However, professional investment firms are increasingly recognizing professional-grade workforce data and analytics as a valuable indicator of corporate performance.

Workforce analytics platforms like Aura Intelligence provide real-time hiring and attrition trends, workforce sentiment, and skill evolution data to help investors gain insights into company health before it reflects in financial statements.

How Private Equity Firms Use Workforce Data for Smarter Deals

Private equity firms are also using hiring and workforce data to assess acquisition targets. Changes in hiring and turnover trends can reveal operational strengths or weaknesses that traditional financial statements may not capture.

• PE firms now incorporate hiring and attrition trends into due diligence

• Companies that engage in aggressive hiring for growth roles often see stronger revenue growth

• Workforce restructuring before an acquisition leads to EBITDA margin improvements post-deal

Aura Intelligence provides real-time hiring data that allows PE firms to evaluate operational efficiency, workforce stability, and organizational structure before making investment decisions.

How Hedge Funds and VCs Gain an Edge with Alt Data and Workforce Analytics

Hedge funds and venture capital investors use workforce data to source deals, predict industry trends, and monitor corporate performance.

• 61% of investment firms use AI for investment research and trading, and 85% expect to increase AI usage in the coming year

• Lowenstein Sandler saw that the biggest increases in alternative data use in 2024 came from:

  • Web scraping (+20%)

  • Cloud platform workforce data (+17%)

  • App usage tracking (+17%)

  • Biometric data (+16%)

By tracking workforce movement, hiring patterns, and employee sentiment, investors can detect shifts in competitive positioning, anticipate earnings trends, and identify potential risks or opportunities before they are reflected in financial statements.

The AI Revolution in Alternative Data & Investment Research

The integration of AI with alternative data is reshaping the investment landscape. AI-powered tools now automate alternative data collection, analysis, and forecasting, reducing research time by up to 66%.

How Investment Firms Are Using AI with Alternative Data

• 76% of investment firms use AI to access more timely, accurate, and comparable data

• 70% use AI to filter or exclude inconsistent data

• 67% use AI for summarizing research and materials

• 68% use AI for monitoring existing investments

Aura Intelligence integrates machine learning and generative AI into its workforce analytics platform, providing real-time insights that streamline investment research and enhance decision-making.

The Future of Investment: AI-Powered Alternative Data Insights

The role of AI-powered workforce intelligence in investment strategies is expected to expand significantly over the next decade.

Key Trends to Watch

• Increased spending on workforce intelligence, as over half of investment firms now spend at least $1 million annually on alternative data, with 95% expecting to increase budgets in 2025

• Real-time workforce analytics becoming standard, as operational insights add depth to alt data streams

• AI-driven automation in workforce data analysis and decision making accelerating

• Workforce sentiment analysis gaining traction as a critical risk assessment tool for tracking employee satisfaction and leadership effectiveness

Workforce Data is Now an Essential Investment Tool

As the alternative data market rapidly expands, hiring and operational workforce data will become increasingly indispensable for investment firms.

• Hedge funds leverage hiring trends to predict stock price movements and earnings surprises

• Private equity firms use hiring data for due diligence and post-acquisition integration and restructuring

• Venture capital investors use workforce data to identify early-stage growth opportunities

Aura Intelligence is at the forefront of this transformation, providing real-time workforce analytics and AI-driven insights that help investment professionals stay ahead of the market.

With 94% of alternative data users increasing their budgets, those firms that fail to integrate workforce intelligence into their investment strategies risk being left behind in an increasingly data-driven world.

Gain an investment edge with AI-powered workforce insights. Schedule a demo with Aura Intelligence to discover the future of data-driven decision-making.