Not Your Average Family Business

How Katie Leininger and Her Father Dave are Launching a New Quant Firm

Hearing the phrase “family business” doesn’t exactly evoke images of a high-tech quant investment management firm, but that’s exactly what Springtech Capital is. Katie Leininger and her father Dave Leininger have spent the last few years developing proprietary software they will use to run their own quant fund.

We interviewed Katie to learn how she and her father started Springtech Capital, how getting access to a wider data set through FinTech Sandbox helped them develop their software, and what their plans are for growing their firm.

This is part 3 of “The New Faces of FinTech” series. Don’t forget to check out
part 1, and part 2 .

Tell us the story of Springtech Capital…

Katie: My father built and sold several businesses, and in that process he learned some investing lessons in the Dotcom Bubble and the 2007–2008 Financial Crisis. Frustrated with the lack of easily accessible, high performing active investment managers, he started exploring active trading himself and developed an algorithm that really worked well. That’s when he asked me to help him start this business.

We’re a quantitative investment management firm launching our first hedge fund this year. We have built a software that makes it possible to automatically execute smarter trades with downside protection, all driven by our algorithms. Right now, we’re focused on trading futures contracts, but we are beginning to test other security types.

We’re also committed to investing for impact. We plan to invest 10 percent of our net profits in organizations that are changing the world and to launch a social impact-focused fund in 2019.

What milestones really made a difference to the growth of your company?

Katie: There were two:

1. Hiring the right team. We have some full time data science and engineering people who are helping develop our product. We also have put together an incredible advisory board. Getting that team together has been invaluable for improving our product over all.
2. Getting to the current iteration of our software. This originally started out as a side project in Visual Basic and Excel spreadsheets, and now it’s a robust, flexible software solution. That all goes back to the team we’ve built.

What strategies will you implement over the next year to continue the growth of your business?

Katie: We will launch the fund in 2018 with money from our close network, which we expect will come mostly through word of mouth. We think our track record will help us evolve from there to attract more individuals and eventually institutional investors throughout our wider network.

APIs are evolving as an industry standard. How do you leverage these interfaces in the development of your product?

Katie: It makes our lives a lot easier. Our partners, including FinTech Sandbox partners, have great APIs and documentation. That reduces our development time and makes it easier to integrate with our data partners. We can explore data more easily and run tests before we decide to pull it into our data warehouse. Speed is key.

How are APIs and open data influencing the growth of your product and business?

Katie: We’re seeing a lot of interesting alternative open data sets that might not be traditionally associated with finance, but can be really valuable. I’m encouraged that we’ll be able to leverage APIs and open data sets for our impact fund as well.

Say you want to look into investing in municipal bonds to achieve social impact. It could be related to needed infrastructure. Measuring impact has traditionally been difficult, but now that there’s more open data available to judge if certain things are actually driving good outcomes, we can build new solutions to evaluate the “social returns” of our investments. You can look at the progress of infrastructure development, traffic data, property values, health outcomes, etc and piece together a very interesting and more holistic picture of the impact of this muni bond you invested in.

How has working with FinTech Sandbox’s data sources helped you develop your product?

Katie: Initially, when we built the algorithm, we only worked with technical data — just price, volume, and indicators derived from those values. It worked well, but we believe that bringing in additional data gives us more of an edge. Fundamental, macroeconomic and sentiment data provides insights into which securities to trade and which algorithms should be deployed at a given time. We’re learning now how to leverage data on the impact side as well.

Beyond data, FinTech Sandbox allows us to test many data sources and see which ones add value before we commit to paying for data.

What does the future of this movement look like?

Katie: From an investment management perspective, I believe that data-driven, quantitative trading will outpace the growth of other, more traditional passive investing approaches. Data allows us to understand our investments and the market in new and unique ways. I’m really excited to see how this continues to evolve as we see more advances in AI and Machine Learning as well.

Open data sets lower the barrier to entry and let people tackle problems. You can understand problems in a very granular way.

There’s more! Part 4 of the “The New Faces of Fintech” series coming soon.

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