A start-up that has been predicting the Fed's next move just scored $3 million in funding

A start-up that has been predicting the Fed's next move just scored a big win.Prattle Analytics, a Missouri-based data provider, said on January 24 that it had raiseda $3.3 million seed round of financing led by GCM Grosvenor, a Chicago-based global investment and advisory firm with $45 billion in assets."As a 'fund of funds,' Grosvenor has a birds-eye view of the hedge fund and capital markets industry," said Prattle CEO and cofounder Eric Schnidman."Their support is proof that the marketplace especially hedge fundscould greatly benefit fromthe data we are producing," he added.According to Schnidman, the data they offeris"unbiased quantitative data on central bank communications."Essentially, Prattlequantifies the language in Fed communications. Thatdata can then be used to predict the market impact of a certain central bank statement.The company received a boost last year when the San Francisco Fed said Prattlewas able to predict the Fed's "dot plot," the aggregated forecast of where Fed officials see interest rates at numerous points in the future, using Fed communications ahead of the dot plot's release. And in December 2016, the Fed confirmed that the data produced by Prattle can be used to predict the impact of Fed communications on treasury yields.The idea for Prattle can be traced back to Schnidman's days as an academic."I am a self-described recovering academic," he told Business Insider."I got my PhD in game theory, and in the process I became obsessed with the Federal Reserve and the ways in which they communicate," Schnidmansaid."I quickly noticed that the markets had an incredibly difficult time digesting the complexity of Federal Reserve communications," he said. "Pundits on every business news channel would spend hours analyzing one sentence or phrase."Schnidmanfiguredthere had to be a better way to analyze the totality of thesecommunications in a more efficient and time effective manner. And thus Prattle was born.Prattle's data will likely become more attractive as the markets continue to grow in complexity, according to Trevor Kienzle, the managing director of Correlation Ventures, one of the firms participating in the funding round."Prattle's technology is fundamentally changing the way traders and analysts think about and consume financial information," he said. "Data matters more today than ever before, and being able to effectively quantify market-moving language has tremendous potential, not only for financial services, but in a variety of other industries."Join the conversation about this storyNOW WATCH: A Harvard business professor explains a legal form of 'insider trading' in America
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