During our initial discussions for AlphaNu, our team had many options as to how to open up the algorithm trading market to retail traders.
Our first option was to become an outsourcing firm for algorithm developers. As we had many readily available contacts in the algorithm trading space interested in reaching out to niche markets, we could have simply represented them as their salespeople and market directly to customers, becoming a de-facto sales firm for algorithms in markets like China. The second alternative was to purchase the algorithms ourselves and sell access to customers cheaply, banking on our client relationships and reputation to market the algorithms.
However, the idea that appealed to us most was to kickstart a new trading movement. A revolution for the financial industry. At AlphaNu, we believe strongly that algorithmic trading should be made available to everyone, especially retail traders. Our common belief is in democratizing the markets; to level the playing field in a way which allows everyone to participate in the financial markets without being disadvantaged. As traders, we understand both the benefits and drawbacks behind algorithmic trading — and recognize that there is no stopping automation in our future. To us, the only sustainable solution is not to shut down or attempt to regulate trading, but to ensure that every market player, big or small, is able to gain access to these resources — be it collectively or individually.
To facilitate this, we looked towards the marketplace model used by companies such as Amazon, eBay, Etsy and Alibaba for inspiration, as well as a growing class of SaaS-enabled Marketplaces such as Upcounsel (legal services) and Fiverr/Upwork (Freelancing). These models have proven extremely effective in creating rapid and balanced growth amongst the buyer and seller sides, while at the same time offering innovative SaaS solutions on the platform that are necessary for them to conduct business.
The closest comparison to our model would be UpCounsel; most businesses don’t want to pay premium prices for legal consultations, especially quick one-off consultations. In UpCounsel, business owners get to quickly hire trusted attorneys on a freelance basis, while attorneys can acquire new clients without having to promote or maintain a website — plus access to huge quality-of-life tools that make closing the deal and following through extremely easy for both parties.
In a similar fashion, AlphaNu’s target audiences face a similar issue and behave in the exact same way — customers want to automate their trading and access algorithmic trading, but may not have the right trading capital amount to justify purchasing the entire algorithm at a hefty price. With our tools and trading model, customers get to purchase access to algorithms at a low cost while algorithm developers get to tap on the collective monetization potential of a huge market with minimal effort and a platform that helps them to scale.
Even the marketing technologies we are utilizing for AlphaNu is a game-changer. With affiliate marketing forming a huge lead funnel for many marketplaces today, we’ve applied our own twist to convert our observer audiences into involved parties on our platform by introducing Revenue Contracts — these blockchain-based Smart Contracts represent a portion of the future revenue of a listed algorithm on our platform and are issued by the algorithm developer. By allowing third parties to benefit from the sales, we hope to create our own ambassadors through having them be monetarily incentivized by our movement and our platform.