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Quantopian

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Quantopian
IndustryFinance
Founded2011
Defunct2020
HeadquartersBoston, Massachusetts, United States
Key people
  • John Fawcett, CEO & cofounder
  • Jean Bredeche, CTO & cofounder
Number of employees
45[1] (2016)
Websitewww.quantopian.com

Quantopian was a company that aimed 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]

In November 2020, Quantopian announced it would shut down after 9 years of operation.[5]

History

[edit]

John Fawcett and Jean Bredeche founded Quantopian in 2011.[6][7] Over its history, Quantopian raised $48.8M from investors such as Spark Capital, Khosla Ventures, Bessemer Venture Partners, Point72 Ventures, and Andreessen Horowitz.[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 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

[edit]

The company ran a two-sided market business model:

The first side consisted of algorithm-developer members who developed and tested for free, focusing on algorithm development for factors that can be added to Quantopian's offerings to institutional investors. It hosted contests called "Quantopian Open", where anyone could join and enter regardless of education or work experience.[18][19][20] Quantopian provided them with free data sources and tools, largely built in the Python programming language.

The second side was institutional investors. These members had their investments managed by the winning algorithms. Successful developer-members could get a royalty or commission from investor-members, who profited from the former's algorithm used with larger resources > $1M.[21] Board member Andrew Parker claimed that Quantopian aimed for modest number of users and a large average revenue per user (ARPU); more like Bloomberg than Facebook.[22]

The business model capitalized 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]

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.[27][28][29] Her study was inspired by a Credit Suisse’s Gender 3000 report,[30][31] 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."[32] Writing for Wired magazine, Fawcett proposed that Quantopian be used as a MOOC-like platform for higher education.[20]

Technology

[edit]

Quantopian's web-based product was written in Python. Parts of the company's technology were available under an open source license, in particular, their backtesting engine dubbed "Zipline."[33][34] The uploaded algorithms of users remained the trade secrets of the individual (unless the person chooses to publish them). The company claimed that its employees could not access the submitted algorithms (except in certain circumstances[35]) and that protection was ensured by "alignment of interests".[36][21]: 49m:50s  The company did however reserve the right to review the performance and other outputs of user's algorithms.[35] Allowing users to run arbitrary code on its servers posed some unusual cyber-security challenges.[37]

Termination of services

[edit]

In October 2020 CEO John Fawcett announced, "I'm sad to say that we will be winding down Quantopian's free community offering over the next couple of weeks and on November 14th, the community platform will be taken down.... We know this is short notice.... Crowd-sourcing alpha was a moonshot and I'm deeply thankful that we had the opportunity to pursue the dream together for 9 years."[38]

After publishing the termination of its services for quants, the Quantopian team disclosed their intent to integrate with commission-free broker Robinhood Markets.[39]

To fill the gap left by Quantopian, a number of traders have relied on open source projects like Gekko and Freqtrade. The first companies to capitalize on the gap left by Quantopian were CrunchDAO, QuantConnect, and Numerai.[38] In recent years,[as of?] a group of cloud-based tools has emerged to service the needs of quants with a specific focus on cryptocurrencies including 3commas, Mudrex, and Tuned.[40]

References

[edit]
  1. ^ a b Fernandes, Deirdre (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. ^ Konstantinovic, Danny (2020-11-09). "How Quantopian's open-source investment dream died". www.businessofbusiness.com. Retrieved 2023-06-05.
  6. ^ "Quantopian, Inc.: CEO and Executives". Bloomberg BusinessWeek. Archived from the original on March 4, 2016. Retrieved 2015-03-21. John Fawcett: Co-Founder and Chief Executive Officer -- Jean Bredeche: Co-Founder and Chief Technology Officer
  7. ^ a b 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
  8. ^ 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.
  9. ^ Keohane, Dennis (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,...
  10. ^ Burger, Dani (November 14, 2016). "Andreessen Horowitz, Point72 Invest in Crowd-Sourced Quantopian". Bloomberg. Retrieved 2019-01-03.
  11. ^ Gerhardt, Dave (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. ^ a b Lewis, Katrina (August 2, 2018). "Crowd-Sourced Quant Network Allocates Most Ever to Single Algo". bloomberg.com. Retrieved 2019-01-03.
  14. ^ a b Hope, Bradley (2016-07-27). "Steven A. Cohen's Newest Bet: Do-It-Yourself Computer Traders". The 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" (Press release). PR Newswire. 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". The 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. ^ Greg Ryan (20 February 2020). "Fintech firm Quantopian is returning investors' money, switching strategies". Boston Business Journal. Retrieved 2022-12-30.
  18. ^ Quantopian (2015-03-21). "Grant Kiehne, Finance Industry Outsider, Awarded $100,000 to Manage by Quantopian" (Press release). PR Newswire. 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. ^ a b 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. ^ a b Baker, Natasha (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". The 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. ^ 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
  28. ^ Wechsler, Pat (2015-03-03). "Women-led companies perform three times better than the S&P 500". Fortune. 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.
  29. ^ 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...
  30. ^ 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...
  31. ^ Rubin, Karen; Dunn, Dan (2015-03-18). "How Women are Conquering the S&P 500". QuantCon 2015. Retrieved 2015-03-22.
  32. ^ "Credit Suisse Gender 3000: Women in Senior Management". Credit Suisse. September 2014. Retrieved 2015-03-22.
  33. ^ "Quantopian, Inc". GitHub.
  34. ^ "Zipline". zipline.io. Retrieved 2015-03-22.
  35. ^ a b "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.
  36. ^ "On Trust". Quantopian. 2012-11-06. Retrieved 2015-03-25.
  37. ^ "Post mortem of 12/12/12 attack on Quantopian". Quantopian. 2012-12-19. Retrieved 2015-03-25.
  38. ^ a b Butcher, Sarah (2020-11-02). "Howls of pain as quant site 'unexpectedly' shuts down". Efinancial Careers. Retrieved 2021-08-22.
  39. ^ Capelj, Renato (2020-11-05). "Quantopian Joins Robinhood to Democratize Finance for All". Benzinga. Retrieved 2021-08-22.
  40. ^ Hunnicut, Pattom (2021-08-11). "BEST CRYPTO TRADING BOTS". Benzinga. Retrieved 2021-08-22.
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