Quantopian

Quantopian is a Boston-based company that aims to create a crowd-sourced hedge fund by letting freelance quantitative analysts develop, test, and use trading algorithms to buy and sell securities.[2][3][4]. Its primary competitors are other open source trading platforms mainly Numerai, QuantConnect, & WorldQuant.

Quantopian
IndustryFinance
Founded2011
HeadquartersBoston, Massachusetts, United States
Key people
  • John Fawcett, CEO & cofounder
  • Jean Bredeche, CTO & cofounder
Number of employees
45[1] (2016)
Websitewww.quantopian.com

History

Quantopian was founded in 2011 by John Fawcett and Jean Bredeche.[5][6] Over its history, Quantopian has raised $48.8M from investors such as Spark Capital, Khosla Ventures, Bessemer Venture Partners, Point72 Ventures, and Andreessen Horowitz.[6][7][8][9][10] As of July 2016, the company consisted of 45 employees[1], up from 20 employees in January 2014[11] and 12 in January 2014.[12] As of August 2018, the company had over 210,000 members[13] compared to 85,000 in July 2016[14], 20,000 in May 2014, and 10,000 in October 2013.[15][16] In July 2016 Steven A. Cohen, chief executive officer of Point72 Asset Management, announced his firm will put up to $250M under the direction of algorithms managed by Quantopian and in addition make an investment in Quantopian itself.[14] The company has funded individual algorithms with as much as $50,000,000.[13] In February 2020 Quantopian announced it would return investors' money due to the underperformance of its investment strategies. [17]

Business model

The company has a two-sided market business model:

The first side consists of algorithm-developer members who develop and test for free, focusing on algorithm development for factors that can be added to Quantopian's offerings to institutional investors .

All members can compete against other members in a series of contests called the "Quantopian Open."[18][19] Anyone can join the site and (optionally) enter the contests: no particular educational qualification nor work experience are required.[20] Quantopian provides them with free data sources and tools, largely built in the Python programming language.

The second side is institutional investors. Serving them will become the main focus of Quantopian. These members have their investments managed by the winning algorithms. Successful developer-members can get a royalty or commission from investor-members, who profit from the former's algorithm used with larger resources > $1M.[21] Board member Andrew Parker claims that Quantopian is aiming for modest number of users and a large average revenue per user (ARPU); more like Bloomberg than Facebook.[22]

The business model capitalizes on a trend jokingly dubbed "the latest DIY craze" by the Wall Street Journal.[23]

Previously the company provided brokerage integrations to individual investors. [24] These integrations were continued by the community who started the open source project Zipline-Live [25]

In 2018, the company announced the availability of an enterprise software product for asset managers, in partnership with FactSet.[26]

Technology

Quantopian's web-based product is written in Python. Parts of the company's technology are available under an open source license, in particular, their backtesting engine dubbed "Zipline."[27][28] The uploaded algorithms of users remain the trade secrets of the individual (unless the person chooses to publish them). The company claims that its employees are forbidden from accessing the submitted algorithms (except in certain circumstances[29]) and that protection is ensured by "alignment of interests," meaning that all users would leave and the company collapse if that trust were ever violated.[30][21]:49m:50s The company does however reserve the right to review the performance and other outputs of user's algorithms.[29] Allowing users to run arbitrary code on its servers poses some unusual cyber-security challenges.[31]

Usage in study of corporate governance

In 2020, Quantopian maintains an all male leadership team. In 2015, Quantopian's Director of Products, Karen Rubin, used the service in a study that showed that a hypothetical portfolio of investments in women-led companies would perform three times better than an investment in an index fund based on the S&P 500 over the same period.[32][33][34] Her study was inspired by a Credit Suisse’s Gender 3000 report,[35][36] specifically that "Companies with more than one woman on the board have returned a compound 3.7% a year over those that have none..." and yet paradoxically only "12.7% of boards had gender diversity."[37]

Usage as alternate platform for higher education

Writing for Wired magazine, Fawcett proposes that Quantopian be used as a MOOC-like platform for higher education.[20]

Awards

Quantopian was ranked #98 on Forbes' 2014 "List of America's Most Promising Companies."[38][12] Also in 2014, Mike Hogan of Barron's called it "Best site for quants."[39]

References
  1. Deirdre Fernandes (2016-07-30). "5 things you should know about John Fawcett". Quantopian. Retrieved 2019-01-03.
  2. McLaughlin, Tim (2013-07-01). "For financial geeks, a do-it-yourself hedge fund site". Reuters. Retrieved 2015-03-23. The Boston-based firm...
  3. Tudball, Dan (2014-03-25). "Start Me Up!". Wilmott Magazine. 2014 (70): 30–39. doi:10.1002/wilm.10304.
  4. "Quantopian". angel.co. Retrieved 2015-03-23. Crowd-sourced hedge fund
  5. "Quantopian, Inc.: CEO and Executives". Businessweek. Retrieved 2015-03-21. John Fawcett: Co-Founder and Chief Executive Officer -- Jean Bredeche: Co-Founder and Chief Technology Officer
  6. Cohan, Peter (2013-07-01). "Quantopian Wants To Turn Stock Trading Algorithmic". Forbes. Retrieved 2015-03-21. Quantopian ... lets people build, test, and execute trading algorithms
  7. Alden, William (2013-10-02). "Quantopian Raises $6.7 Million to Help Traders Make Algorithms". The New York Times : DealBook. Retrieved 2015-03-21. Quantopian ... announced on Wednesday that it had raised a financing round from Khosla Ventures and Spark Capital.
  8. Dennis Keohane (2014-10-08). "HubSpot goes public a week after Wayfair, raises $125 million". Boston Globe. Retrieved 2015-03-21. 'I think HubSpot could be a company that produces lots and lots of entrepreneurs—lot of people who might spin out and start their own thing,' Hower said. Already alums of HubSpot hold prominent roles as founders or executives at InsightSquared, Quantopian,...
  9. "Quantopian". Crunchbase. Retrieved 2015-03-21. $15M / Series B - Oct 16, 2014 - Investors: Wicklow Capital Spark Capital Khosla Ventures Bessemer Venture Partners
  10. Burger, Dani (November 14, 2016). "Andreessen Horowitz, Point72 Invest in Crowd-Sourced Quantopian". www.bloomberg.com. Retrieved 2019-01-03.
  11. Dave Gerhardt (2014-09-28). "Tech In Boston #16 with Karen Rubin: The Early Days of Hubspot, Learning VC and Building for Quants". Tech In Boston. Retrieved 2015-03-21. Karen Rubin is Director of Product Management at Quantopian, a company that provides a platform for anyone to build, test, and execute trading algorithms.
  12. "America's Most Promising Companies". Forbes. Archived from the original on 2014-01-24. Retrieved 2015-03-22.
  13. Lewis, Katrina (August 2, 2018). "Crowd-Sourced Quant Network Allocates Most Ever to Single Algo". www.bloomberg.com. Retrieved 2019-01-03.
  14. Hope, Bradley (2016-07-27). "Steven A. Cohen's Newest Bet: Do-It-Yourself Computer Traders". Wall Street Journal. Retrieved 2016-07-27.
  15. Quantopian (2014-06-06). "Quantopian Has $100M in Algorithmic Investing Trading Volume in May, Opens Platform to All Investors". prnewswire.com (Press release). Retrieved 2015-03-22. Quantopian is built around a community of more than 20,000 members.
  16. Kolodny, Lora (2013-10-16). "Why VCs Will (and Won't) Fund Niche Startups". Wall Street Journal. Retrieved 2015-03-21. And Quantopian Inc. also raised $8.8 million to bring a browser-based, algorithmic trading platform to “hundreds of thousands” of programmers in financial services. The company recently hit a 10,000-user mark.
  17. https://www.bizjournals.com/boston/news/2020/02/20/fintech-firm-quantopian-is-returning-investors.html
  18. Quantopian (2015-03-21). "Grant Kiehne, Finance Industry Outsider, Awarded $100,000 to Manage by Quantopian". prnewswire.com (Press release). Retrieved 2015-03-21. Quantopian has awarded a $100,000 account to Grant Kiehne, the winner of the February edition of the Quantopian Open.
  19. "Quantopian Managers Program". Quantopian. Retrieved 2015-03-21. Only strategies with 6 months of real money live trading track record on the Quantopian platform will be considered. ... Don't have a funded Interactive Brokers account to begin live trading? You can submit your algorithm to the Quantopian Open, a paper-trading contest...
  20. Fawcett, John (June 2013). "Hacking Your Education: The Next Generation of Students". Wired. Retrieved 2015-03-21. Our hope is that Quantopian can be another resource for smart people interested in quantitative finance, that aren’t necessarily taking the traditional quant path...
  21. Natasha Baker (2015-02-20). "IACS Seminar: Quantopian". Institute for Applied Computational Science, School of Engineering and Applied Sciences, Harvard University. Retrieved 2015-03-21. Our platform is based entirely in Python...
  22. Cohan, Peter (4 October 2013). "Is Quantopian The Next Bloomberg?". Forbes. Retrieved 2015-03-21. For example, billion-plus users Facebook’s ARPU is about $2 and Bloomberg charges its 350,000 users on 120,000 terminals at least $16,000 per user.
  23. Hufford, Austen (10 August 2015). "Algorithmic Trading: The Play-at-Home Version". Wall Street Journal. Retrieved 2015-08-11. Quantopian, for example, lets users create their own algorithms free of charge and pays users for the ones that perform best.
  24. "Phasing Out Brokerage Integrations".
  25. "Zipline-live".
  26. "Quantopian looks beyond amateur investors to new customer base". October 31, 2018. Retrieved 3 January 2016. (Subscription required.)
  27. "Quantopian, Inc". GitHub.
  28. Quantopian. "Zipline". zipline.io. Retrieved 2015-03-22.
  29. Quantopian. "Quantopian Terms Of Use". Retrieved 2015-03-23. Quantopian will not review, share, or otherwise make use of private Content except as specifically provided in our Privacy Policy or this Agreement. If in the course of providing technical support or other maintenance of the Services it becomes necessary for Quantopian to view your private Content, such viewing will be restricted to the very specific technical purpose. ...we may review the results of your backtests and live trading. We may review the performance and other "data exhaust" of your Content.
  30. jik (2012-11-06). "On Trust". Quantopian. Retrieved 2015-03-25.
  31. jik (2012-12-19). "Post mortem of 12/12/12 attack on Quantopian". Quantopian. Retrieved 2015-03-25.
  32. Kozlowska, Hanna; Antunes, Xana (2015-03-17). "Companies run by women perform better". Quartz. Retrieved 2015-03-22. [Rubin] was curious to figure out if you could correlate female leadership to superior stock performance
  33. Wechsler, Pat (2015-03-03). "Women-led companies perform three times better than the S&P 500". Fortune magazine. Retrieved 2015-03-22. 'It’s based on a buy-and-hold strategy aimed at looking at how well women CEOs have performed cumulatively,' says Karen Rubin, Quantopian’s product manager.
  34. Hickey, Walt (2015-03-18). "Significant Digits For Wednesday, March 18, 2015". FiveThirtyEight. Retrieved 2015-03-22. Karen Rubin analyzed the performance of Fortune 1000 companies...
  35. Rubin, Karen (2015-02-11). "Quantopian - Research: Investing in Women-led Fortune 1000 Companies". quantopian.com. Retrieved 2015-03-22. Credit Suisse’s Gender 3000 report looks at gender diversity...
  36. Rubin, Karen; Dunn, Dan (2015-03-18). "How Women are Conquering the S&P 500". QuantCon 2015. Retrieved 2015-03-22.
  37. Credit Suisse Research Institute (September 2014). "Credit Suisse Gender 3000: Women in Senior Management". Credit Suisse. Retrieved 2015-03-22.
  38. "Quantopian on the Forbes America's Most Promising Companies List". Forbes. January 2014. Retrieved 2015-03-21. Quantopian: Forbes Lists: #98: America's Most Promising Companies: (2014)
  39. Hogan, Mike (2014-07-04). "Best Sites for Quants". Barron's. Retrieved 2015-03-23.
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