Quantopian

Quantopian was a Boston, Massachusetts financial services and software company that sought to build a crowd-sourced hedge fund. It provided a free, web-based platform where independent quantitative analysts — described in coverage as scientists, doctoral students, professors, financial analysts and hobbyists — could write, backtest and (for a period) execute trading algorithms in Python, using data sets and tooling supplied by the company, including minute-level equity data and third-party alternative data (sources 0, 1, 2, 6).

The platform ran contests ("Quantopian Open") in which member algorithms competed; the strongest algorithms were licensed by Quantopian and allocated capital, with authors retaining intellectual property and receiving a share of returns or a royalty/commission. The company reported funding individual algorithms with as much as $50 million (source 0). Quantopian also released core parts of its stack under open source licenses, including the Zipline backtesting engine, and later the Pyfolio portfolio analytics and Alphalens factor-analysis libraries, which continued to be used and forked after the company closed (sources 0, 3, 6).

Quantopian ended live trading in 2017 and paper trading in 2019, terminated its daily contests in May 2020, and in February 2020 returned investor money after its market-neutral strategy underperformed. In late 2020 it announced the wind-down of its free community offering, taking the community platform offline on 14 November 2020. Co-founders John Fawcett and Jean Bredeche, together with most of the remaining staff, joined Robinhood's product and engineering teams (sources 0, 3, 4, 5, 6).

Founding story

John Fawcett and Jean Bredeche founded Quantopian in 2011 with the aim of democratizing quantitative investing by making institutional-grade analysis tools and data accessible to anyone. Fawcett, a 1999 Harvard engineering graduate, worked in San Francisco during the dot-com period and later at Major League Baseball on video encoding before returning to Boston to work at a hedge fund picking technology stocks; he left to found Tamale Software, a research management technology provider for asset managers, which was sold to Advent Software in 2008. (Reports of the Tamale sale price differ: Forbes cites $70 million, while the Boston Globe reports $28 million plus shares in Advent.) One secondary source names the co-founder as Jean-Marie Richardson, conflicting with other sources (sources 0, 1, 2, 5, 6).

Business model

Two-sided marketplace. On one side, algorithm-developer members used the platform and its data for free; on the other, institutional investors supplied capital that was managed by the winning algorithms, with developers receiving a royalty or commission on the returns their algorithms generated. Commentators noted that users were not the paying customers — investors were — with the users supplying the investment ideas sold to those investors. From 2018 the company also offered Quantopian Enterprise, a commercial software product for asset managers delivered in partnership with FactSet (sources 0, 3).

Revenue derived from managing institutional capital using licensed member algorithms (management/incentive economics on funds such as the capital directed by Point72), with developers paid a cut of returns, plus, from 2018, an enterprise software offering sold to asset managers through a FactSet partnership (sources 0, 3).

Traction

Membership grew from 10,000 in October 2013 to 20,000 in May 2014, 85,000 in July 2016 and over 210,000 by August 2018; one secondary account cites over 250,000 members by 2017. Headcount rose from 12 and then 20 in January 2014 to 45 by July 2016, and stood at roughly 50 before 2020 staff departures. Point72 committed up to $250 million to be managed by Quantopian-selected algorithms in July 2016, and the company funded individual algorithms with as much as $50 million (sources 0, 2, 3, 6).

Latest developments

Following the November 2020 shutdown of the community platform, Fawcett announced that Quantopian and Robinhood would come together, with the co-founders and most of the headcount joining Robinhood's product and engineering teams; sources at the time did not confirm whether Robinhood purchased the platform, while a later secondary account states Robinhood integrated the team and technology in December 2020. The open-source libraries Zipline, Pyfolio and Alphalens outlived the company and are maintained via community forks such as zipline-reloaded and zipline-trader (sources 4, 5, 6).