Startup Spotlight #195: Quantbase
Startup Spotlight #195: Quantbase
Quantbase makes high-risk investing easy.
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I got the chance to speak with Som Mohapatra, co-founder and Chief Investment Officer of Quantbase, about what he’s working on at his startup, and any advice he has for emerging entrepreneurs.
Quantbase makes high-risk investing easy. We run a collection of automated portfolios for everything high-risk, with buttoned-up quant hedge fund strategies on one end and crypto indices on the other, peppered with mass appeal strategies like the Nancy Pelosi tracker and Inverse Cramer index. The long-term vision tackles the next $20-40T in the next wave of alternative and high-risk assets, as they go from niche assets with media coverage that far outclasses AUM, to accepted members of a well-hedged portfolio. We’re making high-risk not just definable, but standardized and investable across the board. The site is live at getquantbase.com.
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Startup Spotlight: Quantbase
Problem: Smart high-risk investing is really hard and really time-consuming. And while the acceptance of risk in order to get super-sized returns is proliferating in the alternative space (crypto, prediction markets, etc), it’s a topic that traditional financial institutions are hesitant to even discuss.
Market: Retail trading volume is 20-33% of all US stock market volume, Wall Street bets (as a proxy for high-risk investors) grew 17x in the last year, and the market cap of high-risk assets (proxied in part by the crypto market and some options volume) grew from $0.5T to $4.3T. The market cap of the US stock market is around $30T - if we take the 14% of Americans that have invested in crypto as a proxy for high-risk investors, and results from our user interviews/surveys that showed that people invest on average $16k in high risk, we can back into a TAM of $784B.
Solution: Quantbase is a suite of automated portfolios that make high-risk investing effortless. You can think of these as alternative ETFs - as a user, you can choose from a variety of portfolios that are of interest to you, and Quantbase’s algorithms handle the brokerage connection, trade execution, rebalancing, and tax management all on the back end.
Team: Thomas Stewart, the CEO, is a serial entrepreneur with multiple past exits, including Bazza. Som Mohapatra, CIO, is a quant trader and portfolio manager of a small fund with a few million dollars in AUM. The two met at UVA - Thomas a recent grad, and Som a third-year who ended up taking a leave of absence to build Quantbase.
Recent Success:
Mohapatra: One of the successes we’re proud of is our budding social media prowess on Reddit, HackerNews, and Twitter. Between the two of us, we spend probably 80% of our social media time on these 3 channels - we know them well and how to advertise to them without feeling sales-y. We’ve got about 60% of our AUM (assets under management) from Reddit in the past month and 30% from Twitter. The waitlist was grown entirely organically from our posts on Reddit and HackerNews (which consistently hit the top) and Twitter (with a few tweets going semi-viral). Interestingly enough, the types of Quantbase funds that do well are different in these 3 channels. Twitter seems to like the funnier ones (Inverse Cramer, Pelosi Tracker), HackerNews likes the more quanty ones (leveraged algo-trading), and Reddit like the social media sentiment ones.
Recent Struggle:
Mohapatra: It’s really hard to get trust right, especially if you’re trying to take on a financial institution like Vanguard. The first two weeks after launch, we didn't get more than a couple thousand dollars of AUM in, even with a 7-figure dollar waitlist. We spoke to users every day, and we actually got a lot of feedback about how the site looked scammy, the UI/UX was janky and juvenile, and how there were even bugs in the signup process. Our activation rate was below 1% here, with the industry average being triple that. Talking to users and iterating on the feedback when we saw patterns is what got us out of this. This is all actually incredibly recent - we’re still iterating on this problem, but our activation rate has tripled since early February and we’re scaling fast.
Founder Advice:
Mohapatra: Have a good task management system! It’s integral to the momentum that you are able to 1) set tasks for yourself and see what your teammates are working on per day - and discuss with each other what your goals are and why, 2) actually update the system once you’re done with a task - so your team knows what you’ve done, what you’re doing, and what you have left to do, 3) have a longer-term vision in mind - don’t spend 5 hours on making the dashboard page look really good, if 99.4% of your users drop off before they get to that page. Fix the massive holes in your user bucket before optimizing the smaller ones. The way I do this is by setting a 15-minute timer for myself and having a printed 15-min calendar next to me. Every time my alarm rings, I write down what I was doing the previous 15 mins in my calendar. I can see a birds-eye view of how I’m spending my day, and if it looks like I’m overexposing my time to something unimportant, I move on.
Two Cool Founders You Should Know About:
Mohapatra: Here are two founders you should check out next!
Ed Radion and Lukas Houpt, Co-founders of Squiggly School: Squiggly is a decentralized community of metaverse builders and a learn-to-earn gaming ecosystem.
Alex Singh, Founder of Alfie Health (YC W22): Alfie helps men lose 15% of their weight through virtual visits with providers and prescription medication.
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