Boston Fintech Startup Gets Up To $250M From Hedge Fund King

Steven A. Cohen, a well-known hedge fund manager and one of the richest people in the U.S., has turned to the Boston-based financial services technology startup Quantopian to manage up to $250 million of his money, a move Quantopian’s CEO called “a watershed moment for the entire industry.”

Quantopian, which was founded in 2011, allows users to create investment algorithms and puts the best ones into an investment account of its own. Cohen’s money will be managed using some of those user-generated algorithms, with their creators receiving royalties. His firm, Point72 Ventures, will also be making an undisclosed investment in Quantopian itself.

“These funds will permit Quantopian to make larger allocations and therefore pay larger royalties to authors of profitable algorithms,” Quantopian CEO John Fawcett said in a statement. “I expect this major incentive to galvanize both existing and new members, and propel everyone to new levels of creativity.”

Cohen founded Connecticut-based Point72 Asset Management in 2014 to manage his money. He is best-known as the founder of SAC Capital Advisors, at one time one of the most successful group of hedge funds in the U.S. Cohen moved assets over to Point72 after SAC Capital pled guilty to insider trading charges in 2013. Cohen’s net worth is $12.7 billion, according to Forbes.

Quantopian has ramped up operations in recent months in anticipation of managing outside investors’ money. It brought on its first-ever general counsel and a chief investment officer, Jonathan Larkin, from Hudson Bay Capital Management. Last week it announced it had hired Dragan Skoko, formerly of Batterymarch Financial Management, as head of trading.

The company’s receipt of the full $250 million depends on its hitting certain performance metrics. It has more than 85,000 users and over 400,000 user-created algorithms.

Source: Greg Ryan, Boston Business Journal
Photo: Steven A. Cohen is entrusting up to $250 million to Quantopian to manage using its algorithms. (Scott Eells, Bloomberg)