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Edited by
Pat RegnierBloomberg Businessweek December 21, 2020○ Quantopian tried to
open algorithmic investing
to do-it-yourselfersIn an Italian town about 120 miles northeast of
Rome, Emiliano Fraticelli spends half his day teach-
ing computer science at a local high school and the
other half pursuing a dream he once considered
lost to him forever: quantitative trading. He cre-
ates computer algorithms that scour market data
and make trades based on the patterns they find.
That’s the kind of thing typically done by pro-
fessionals working for hedge funds, with sophisti-
cated computers and data feeds at their disposal.
Fraticelli, 34, who still lives in his hometown in
Teramo, Abruzzo, nestled between the Apennine
Mountains and the Adriatic, decided he couldn’t
leave his elderly parents to pursue an investing
career. “I wanted to have some exposure to this
quant world, but I wanted it to be remote,” he says.
Then he discovered Quantopian, a Boston-based
startup with a free online platform for developing
and testing algorithmic strategies.
Quantopian, backed by hedge fund billionaire
Steve Cohen and venture capital firm Andreessen
Horowitz, was trying to crowdsource great invest-
ing ideas. (Bloomberg LP, which owns Bloomberg
Businessweek, is an investor in Andreessen
Horowitz.) It gave Fraticelli and 300,000 other
users a way to try their hand at computerized trad-
ing. Those whose programs survived a meticulous
screening could have them included in a hedge
fund Quantopian ran and get a cut of their strat-
egies’ profits. The website also hosted contests that
gave cash to the top performers. Fraticelli says he
won a few thousand dollars.
But now he and his fellow Quantopian users are
hunting for an alternative to keep their ambitions
alive. In late October, the company announced it
was shutting down. A few weeks later, Quantopian
Chief Executive Officer John Fawcett announced
that he, his co-founder, and other employees weregoing to work at the retail brokerage Robinhood
Markets Inc.
To some pros, the end of Quantopian was inev-
itable. Could amateurs really figure out anything
they couldn’t? Even high-priced hedge fund man-
agers are struggling to outwit the market these
days. “If you needed surgery done in a hospital
next week, would you let someone who’s just read
books on medicine do it?” asks Mathew Burkitt, a
veteran trader and quant who shut down his own
hedge fund four years ago.
Quantopian’s bet was that this kind of elitism
might give it a competitive edge. By offering every-
one on the internet free access to data, tutorials,
and tools, it sought to beat the army of Ivy League
Ph.D.s by picking the best quant strategies from
the world’s untapped geniuses. It was the wisdom
of the crowd, applied to the nerdiest corner of Wall
Street—radical, sure, but a logical extension of the
burgeoning gig economy and a tech revolution that
was opening up access to ever-deeper market data.
The startup, which was launched in 2011, also
tried to make money by selling an enterprise ver-
sion of its online platform to financial firms. But
that never really took off, and it was mainly banking
on its hedge fund to succeed, according to people
familiar with its operations who spoke on condition
of anonymity. The firm had about $50 million in
venture funding, according to Crunchbase. Cohen
himself committed as much as $250 million to be
managed by the firm.
The fund stopped trading at the start of 2020.
In an interview with the Boston Business Journal,
Fawcett said the fund had underperformed. He
didn’t respond to messages from Businessweek
seeking comment. A spokesperson for Robinhood
says he and the team from Quantopian will help
enhance the information resources available to
its customers.
There’s an irony to Quantopian’s people mov-
ing to Robinhood. That company’s commission-free
trading app has become a phenomenon that’s
pulled young retail investors into a booming bull
market. One take on Quantopian’s failure is that