Finance / Investing / Startups

This startup wants to bring algorithmic trading to everyone

Inovance is aiming high. “If you’re an individual trader and not working for a hedge fund, you’re going to be using our product.”

Inovance cofounder Tad Slaff says he wants to change the game when it comes to machine learning in finance. (Photo by Tyler Woods)

Tad Slaff’s first job out of college was working to help start up a brokerage for two fabulously wealthy brothers from the Middle East. It was in Boulder, Colo., shortly after he and his friend, Justin Cahoon, had graduated from the University of Colorado. A friend of a friend had put them in touch with the brothers, who had showed up in a Mercedes Benz and sharp suits to Slaff and Cahoon’s dorm. A few weeks later, there they were, sitting in a beautiful office in downtown Boulder, getting paid very well, doing what, exactly? They weren’t sure.
The arrangement only lasted a couple of months. The brothers turned out to be hustlers and decided they wanted to move to Los Angeles. Slaff and Cahoon declined to join. Instead, they set out to make their own company.
What they wanted to create was a way for normal people to invest with a similar level of insight available to hedge funds and mutual funds.
These funds have data that goes far beyond what the average investor has, from data on Twitter sentiment, to the average number of cars in Walmart parking lots, to analyst reports. Many of them also have algorithms which analyze the data for them and trade automatically. Slaff and Cahoon wanted to create a customizable trading algorithm for the everyman. Now located in Williamsburg, the company is called Inovance.
The problem is that unless you have a  quantitative background and a ton of time on your hands, there’s no way to draw actionable insights,” Slaff said in an interview. “What we do is allow you to use machine learning algorithms to look at what you’re doing or have a hunch about, and to see if that really pans out.”

Inovance crawls publicly available data sources like earnings reports and foreign exchange indexes to provide customers with a database that can supply answers to questions users pose.
“You select the asset you want to trade and select the data you want to analyze,” Slaff explained. “We use machine learning algorithms and analyze it for you. For example, when quarterly earnings come out and they’re in this range and volume is in that range, you see a 5 percent increase in share price.”
The product is available for an annual fee to users, but the bigger money will come from brokerages.
Slaff sees firms like E-Trade or TD Ameritrade as a perfect fit for Inovance. These mass brokerages have basically competed away their margins by reducing fees per trade, he said, so they’re looking to compete in other realms, like the tools they can offer traders. Inovance is currently negotiating its first contract with a European foreign exchange brokerage to supply exactly that. 
It hasn’t been quick or easy for Slaff and Cahoon though. After the oil money dried up, they decided to pack up and move to San Francisco, because that’s what startups are supposed to do, Slaff recalled.
“We moved there without a lot of connections and tried to raise money.” How’d that go? “Not great,” he said. 
They did get one break, though, when a financial tech accelerator from Charlotte, N.C., accepted their application. So after just a few months they packed up and moved to the financial capital of the south. Inovance did well in the accelerator and won a sponsorship from them to go to a TechCrunch conference.

“We went to TechCrunch Disrupt in New York and met more investors and users in those three days than in the entire life of the company,” Slaff said. “So we packed up shop and moved to New York.”

Slaff currently lives in Williamsburg, while Cahoon lives in Weehawken, N.J.
I chose Brooklyn because I still had that sense of it feeling like a neighborhood but it’s close to the city,” Slaff said. “It has a lot of exciting things happening here in terms of tech, and just interesting interesting people.”
Slaff said the company raised seed funding earlier this summer and is looking at some exciting growth. He’s aiming high.

“Our vision is to be the go-to analytics platform for the financial markets,” he said. “If you’re an individual trader and not working for a hedge fund, you’re going to be using our product. We’re at an incredibly exciting point where we just launched the full version of the platform.”

Inovance allows everyday traders to make their own algos.

Inovance allows everyday traders to make their own algos. (Courtesy image)

Series: Brooklyn

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