No Easy Climb as EquaMetrics Looks to Disrupt Trading and FinTech

7/24/13Follow @jpruth

New York may be hallowed ground for financial business but it can still be hard for some local startups to break into this sector. Chris Ivey, CEO and co-founder of New York-based EquaMetrics, believes companies such as his can insinuate themselves much deeper in this world. “They never really enter financial technology, and if they do it’s on the periphery,” he says. “Mint.com is considered a startup success in fintech (financial technology). Crowdfunding sites are technically considered fintech but we made a trading application.”

EquaMetrics, Ivey says, is betting it will find its niche with a Web app it developed to give individual traders an automated trading platform comparable to the level of computing power found at hedge funds and other institutions. Rizm, the company’s software, lets users create algorithm-driven trading strategies by dragging and dropping widgets in the platform rather than writing code. It also provides access to EquaMetrics’s cloud network, which includes broker and data connections, to run those strategies for live trading.

Automated trading typically relies on mathematical models to help predict trends in the stock market and then trigger the buying and selling of shares. This type of technology, Ivey says, has largely been available to programmers at major financial institutions. “It requires programming knowledge to build the trading strategy for it to actually operate,” he says.

Simplifying the technology, Ivey cautions, does not mean Rizm imbues users with an understanding of automated trading. He says EquaMetrics is not provide preprogrammed algorithms or selling “black box” trading strategies. “We’re giving people a very open environment like a toolbox where they can create their own algorithms without having to actually do the programming,” Ivey says.

People who already have some acumen for trading, he says, and want to put their strategies to work through an automated platform can get the most out of Rizm. “They are building strategies they would otherwise be trading on their own,” he says.

Where algorithmic, automated trading fits in the financial world, Ivey says, is still evolving. Some people believe the technology is about high frequency trading. Others, he says, believe it means execution management to sell or buy big orders at optimal prices. Ivey thinks his platform can create value through automated trading.

In stealth mode since its founding in 2011, EquaMetrics has thus far raised $4.5 million in seed capital, Ivey says. The company came out of stealth in June with the release of cloud-based Rizm. Now Ivey wants to attract new levels of investment to grow the company and further develop the software. Convincing some venture capitalists, who seem more interested in “pop” tech, has been a challenge, he says. “One firm wouldn’t invest in us because we’re in New York City and in fintech,” Ivey says. “That just pisses me off. They want to see social media, a million users, but no monetization strategy.” The lack of funding love for financial technology, he says, makes the sector extremely competitive: “We’re in the shade, not in sunlight.”

Ivey says EquaMetrics got its start during his senior year at Harvard. That spring, while applying for jobs in trading, he found that many employers wanted to see some level of programming experience. “Just so I could speak the language,” he says, “let alone if I was competent enough to do my own programming and get on a trading desk.”

The challenges he faced in the job hunt ignited Ivey’s interest in algorithmic trading. He says one of his fellow co-founders suggested the drag-and-drop method for creating strategies to compensate for people who do not know how to program. Ivey served as the original reference point as a trader who could not program. By the time he graduated, Ivey says EquaMetrics had raised its initial funding and then the team set up shop in New York.

With Rizm out, the company is developing new features such as fundamental trading capabilities and portfolio allocations for the next version of the platform. “We’re working on a marketplace where people can share strategies,” Ivey says. The company is also looking for ways to use data sets, he says, such as Twitter feeds and emerging market data.

Changing the status quo in financial technology, tough as it may be, has not stunted Ivey’s desire to build up EquaMetrics. He hopes to attract talent from Silicon Valley to take a crack at working at his company. “They think of fintech as a last frontier,” he says. “No one’s really [in this space] and it has huge multiples.”

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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