seed Money

[dhride]

Seed Capital
I have been working on an intraday trading system for a while now. The system started as a consultancy job for a hedge fund in California. The system was originally designed to hedge equities in a portfolio against a falling market by using options. Since the project ended, the system changed in many different ways. However the fundamentals are still very similar, the system uses historical data and stochastic calculus to predict intraday price movements. Anyways.....I have done somewhat a fair amount of back testing using historical data. About a month ago I put the system live on a paper trading account, the system has been responding well and now I believe the next step is to find a financial backer to put the system to work live.
The back testing and the paper account are all at a starting value of $500,000 and I believe this is the amount necessary to start the system.
My question is: What would be the best approach to raise the capital I need to put the system to work(besides friends and Family) Should I go directly to small investment houses, sent emails over investors forums(meet up, linkedin, etc) to try to catch the attention of somebody, etc. Also, how much data do I need to back my system and assumptions (100 days of testing on historical data, 100 days of trading on a simulated account, 1000 trades, etc). What about intellectual Property rights?
Any advice is appreciated.:-ss

 

[alain]

during these times, it's going to be hard to raise capital. Start real trading with money from you and your family to build history and then go and try to raise money.

Investors are really afraid now.

 

[alain]

Also, I think small investment houses will give you money as long as you trade with them (like the old day trading houses). I don't know how many of them are still alive.

 

[dhride]

unfortunately, i am a little afraid about t how the system might work with amounts under $500K, I am about to join a proprietary trading desk and work my way up the capital access but I am afraid that the manual, human, trading scheme might not work for someone like me, with a math background, and that I will not be able to reach my capital requirement to put the system to work successfully. Any companies you might have in mind that would be willing to sponsor such a system?
p.s. is a intraday prediction algorithm that most likely close positions after and hour of trading.
I hope to be able to find funding for the syttem so I can study it and make it more accurate and more reliable.

 

[claudewang]

unfortunately, i am a little afraid about t how the system might work with amounts under $500K...

A system only works with big amount of money? It seems to use arbitrage to earn very small spread... do you think it will be convincing to "scary" investors nowadays?

 

[dhride]

Claudewang,
the system is not an arbitrage bot. It will probably work with less money as well as with more money. however, i have not tested the system with amounts much greater or much smaller than 500k. i can tell you that the system uses high volume and the volume of shares in a trade affect the overall result. i am shooting for 500k as an optimal starting point.

 

[Dmytro]

couple of sources

The City recently announced an initiative to launch three seed funds totalling ~$9-10M.

NYCEDC is requesting proposals from fund managers and will be structuring the funds for the next few months. The Funds will most likely begin to make investments in the fall of 2009.
Please keep an eye on the NYCEDC's website for further information.

In the meantime, other seed funds currently in operation in NYC who you can reach out to include NYC Seed and Rose Tech.


hope this helps

 

[dhride]

Dmytro,

Thanks for the information.