Thursday, April 6, 2017

"Steven Cohen’s Crowdsourced Quant Experiment Gets Real"

From Institutional Investor:

Start-up Quantopian is investing in its first algorithms, using money from Cohen’s Point72 Asset Management.
Quantitative trading just took a step forward into its decentralized future. Quantopian, a start-up company that crowdsources trading algorithms and has backing from Steve Cohen’s Point72 Asset Management, has put investment capital into its first crop of algorithms.

The 15 algorithms to be funded, for an investment commitment in the range of tens of millions of dollars, were all developed by computer programmers using the Boston-based Quantopian’s proprietary research platform. The capital comes from an investment Cohen made last year, when he committed as much as $250 million in capital via Point72 to fund promising algorithms on the Quantopian platform. Point72’s venture arm also made a $4 million general partner commitment to the firm. Other Quantopian venture capital investors include Andreessen Horowitz and Bessemer Venture Partners.

Founded in 2013 by John (Fawce) Fawcett, Quantopian uses crowdsourcing and open learning to give the opportunity to build quantitative algorithms — computer programs that use data to identify tradable, and profitable, inefficiencies in the marketplace — to anyone with an interest in doing so. The platform, which includes education and training in how to build algorithms in addition to hosting competitions, events and an annual conference, has attracted would-be quants from all over the world.

The majority of Quantopian’s 120,000 members are not professional hedge fund managers or traders; most have computer programing or science backgrounds and are either interested in building algorithms as a hobby or as a side project as a way to break into finance. The algorithms now getting funded — with capital commitments ranging from $100,000 to $3 million — come from traders living on five continents in eight different countries, including Australia, Canada, China, Columbia, India, Spain and the U.S. When it finds an algorithm that proves to be profitable, Quantopian licenses the algorithm and pays the developer 10 percent of the profits; the developer keeps the intellectual property....MORE