A venture capital fund seeded by Steve Cohen and his employees at Point72 Asset Management is putting up to $250 million into a new fund managed by the start-up Quantopian.
The start-up is a trading platform that uses crowdsourcing to create new algorithms for investing capital.
The deal, which involves a $2 million investment in the start-up, as well as a promise to trade up to a $250 million of Cohen's Point72's company assets using its algorithms, is the first major public deal struck by Point72 Ventures.
Point72 Ventures is the private-company investing arm launched by Cohen and members of his team in May.
The company — which is separate from Cohen's personal venture capital company, Cohen Private Ventures — focuses on finding new technologies that cater to the financial-services industry.
"There's a tremendous amount of information in the world right now, and if you're a portfolio manager sitting there every day, trying to process all that, that is a huge challenge," said Matthew Granade, Point72's head of market intelligence and one of the architects of the Quantopian investment. "So we're really interested in people that are helping you crunch down the information, synthesize it better, help make you more efficient in absorbing it."
Granade, who is also a board member at Quantopian, told CNBC on Tuesday that Point72 traders would begin using the start-up's trading algorithms in the coming months, as soon as both firms could get the technological "piping set up."
Quantopian already has a roster of prominent early investors, including Bessemer Venture Partners, Khosla Partners, and Spark Capital. Founded about five years ago, it has attracted more than 85,000 members, a developer base that includes nuclear-lab researchers, data-company workers, and even some precocious teenagers.
The designers of algorithms who use its platform, referred to by Quantopian as "authors," receive royalties from the use of their models if they're successful at generating returns. But the fact that a money manager the likes of Cohen is putting money into the platform is regarded by Quantopian officials as a key new vote of support.
"Even just the beginning of the conversation was incredibly validating to us," Quantopian John Fawcett said in an interview Tuesday, "that we were on to something and focusing on a problem in the industry."
The problem, as he described it? "Finding talent."