Renowned investor Steve Cohen, his venture capital arm Point72 Ventures, and Quantopian announced today an agreement for Quantopian to manage up to $250 million of investment capital provided by Mr. Cohen.
Quantopian offers a free platform where a vibrant online community of over 85,000 members from 180 countries can create institutional-quality investment algorithms. Investment algorithms created on Quantopian’s platform by members will be used to manage the funds from Mr. Cohen. Each author of a selected algorithm will receive a royalty based on the performance of his or her strategy.
“This is a watershed moment for the entire industry. Steve Cohen, one of the most storied and successful investors, will be supporting investment algorithms produced by Quantopian’s community,” said John “Fawce” Fawcett, CEO of Quantopian. “These funds will permit Quantopian to make larger allocations and therefore pay larger royalties to authors of profitable algorithms. I expect this major incentive to galvanize both existing and new members, and propel everyone to new levels of creativity.”
“The scarce resource in quantitative investing is talent,” said Matthew Granade, the leader of Point72 Ventures. “Quantopian has demonstrated an innovative approach to finding that talent.”
“This relationship demonstrates the unique advantages offered by partnering with Point72 Ventures,” Mr. Granade said. “In addition to receiving investment capital, Quantopian is getting strategic advice that it can’t get from any other investor and Point72 will benefit from an ocean of untapped talent.”
Mr. Cohen’s commitment, a portion of which is contingent on Quantopian meeting certain performance metrics, represents the first major commitment of funds for Quantopian to manage using its members’ algorithms.
Point72 Ventures will also be making an investment in Quantopian. Quantopian has previously received venture investments from leading venture firms, including Bessemer Venture Partners, Khosla Ventures and Spark Capital.
“This deal is exactly what we had in mind when we launched Point72 Ventures,” said Pete Casella, Co-Head of Point72 Ventures.
Quantopian’s portfolio of investment algorithms is selected from the more than 400,000 algorithms written by its community of over 85,000 members, including professors, finance professionals, research scientists, developers, and students. By offering an institutional quality platform online and for free, with access to extensive data, Quantopian gives anyone the ability to create and test investment algorithms -- and be rewarded for their work.
Quantopian evaluates the performance of each algorithm on its platform and makes allocations to selected algorithms based on factors including return, risk, style, capacity, and interaction effects. The authors of the selected algorithms receive a share of the profits generated from their investment strategies.