Xignite gets big money for big data applications

Xignite, which is offering financial data that’s hosted on Amazon’s (s amzn) cloud to its clients, has raised $10 million to become the big data repository for financial market information. The company, which was formed in 2004 before big data and cloud were the buzzwords du jour, hopes to provide quality data for app developers and help financial services firms deal with the incredible demand of data generated by algorithmic trading.

CEO Stephane Dubois explained that firms who had been tracking historical market data suddenly were tracking a hundred times more trades because computers were now taking over part of the job. As such, hosting that data became more expensive and time consuming. The premise behind Xignite was that companies shouldn’t have to support the infrastructure to keep all of that information in-house, when a single repository of that data made more sense. More recently, developers looking for easy ways to access data so they can build applications for mobile devices have tapped Xignite and its APIs.

So, as cloud computing and data markets are more common, and API-based access to data is becoming necessary for apps (mobile ones especially), Xignite believes it’s time to expand. The $10 million in funding, from StarVest Partners and John L. “Launny” Steffens of Spring Mountain Capital and former vice chairman of Merrill Lynch will help it do so. But Xignite offers a lesson for entrepreneurs trying to figure trying to figure out how to roll with what customers may want as opposed to what the entrepreneur thinks they need. Xignite started seven years ago, before the mobile explosion, cloud computing and widespread APIs were prevalent.

“We were going to be a regular financial software company, and we needed data and couldn’t find this data through APIs, so we started building demos and scrapping Yahoo data,” said Dubois. “And people got more interested in the APIs than in the software, so we shifted focus to create this on demand market data infrastructure to serve data through APIs.”

At the time Amazon hadn’t built its cloud yet, so that wasn’t an option, but once it did Xignite jumped on it and realized that aside from being an easy place to store their data, it also made it easy to serve up APIs and essentially become a data marketplace. So Amazon’s cloud, the explosion of algorithmic trading leading to a lot of data, and the desire of mobile developers to build out lightweight, financial applications have created an opportunity that Xignite wants to capitalize on.

The company raised its first round of funding in 2006 and is cash flow positive with 900 clients in 47 countries. It wants to build out more customers in the financial service world so it can be the data backend for the Goldman Sachs and Merrill Lynch’s of the world. At the moment Xignite stores “petabytes of data” on Amazon’s cloud and the goal is to keep that data up there so folks can analyze it on cloud-based servers and just get the information they need in the format they want when they ask for it.

It’s the difference between going out to eat at a specialty restaurant, and keeping the ingredients for a gourmet meal in your pantry and making it whenever you have a craving for high-end food. Xignite is betting that most customers, even financial houses will eventually be willing to eat out, rather than go through the effort and expense of making their own historical databases.