One of the most powerful aspects of technology innovation built on inexpensive massive connectivity is its ability to democratize access to entire industries previously limited to the 1%. Private driver? Uber/Lyft. The best healthcare? Telemedicine. Personal shoppers + delivery? Amazon/eCommerce. Build your own data center? Buy what you need when you need it from a Cloud provider (AWS, Azure, Google, etc.). In wealth management/investing, the 1% have access to a whole host of tools and strategies which are just beginning to become democratized.
As platforms that enable retail investors (Robinhood, Public.com, Coinbase, TradingView, Wealthfront, etc.) have attracted millions of new users over the last couple of years, I have been asking myself “What will these investors want next?” Mobile-first platforms (Robinhood), communities (Public.com), alternative assets (Coinbase), and advanced charting (TradingView) have certainly driven up the retail trading volume. What innovation could drive another leg up? What is missing from the ecosystem? As part of this, I spent a lot of time with my friends at various hedge funds understanding some of the proprietary trading models and data sets they use to identify trading opportunities. One of the foundational tools these hedge funds use is a multi-variant backtesting tool. These tools tend to be proprietary in-house developed or very complicated to use. I started looking for a company that was developing an easy-to-use platform for the retail trader. Enter Tradewell.app.
A multi-variant backtesting tool can help a trader identify repeatable patterns that can create risk-adjusted actionable trading strategies in the future. This allows traders to answer questions like “Is it a good idea to buy Tesla on a big earnings beat?” or “How does Amazon’s stock price react to changes in the overall market volatility trends?” Prior to Tradewell, traders were faced with having to learn Python or a scripting language, understanding the serious math underlying the models, and gathering datasets from fragmented sources. Institutional software for this like Deltix or QuantHouse comes with cost and complexity well outside the retail investor range. Tradewell has an intuitive no-code interface with pre-connected datasets that delivers instant analysis/insights and probabilities/risks is easy to understand visual models.
While still very early, Tradewell seems to have hit a chord with early beta customers
“The website is amazing, I am blown away by this! Can I make an investment in your company? I have never been more excited about a fresh new tool.” E.M., Portfolio Manager
“I love the UX and the reporting. Haven’t seen this elsewhere. You guys are well-positioned to be a game-changer.”
Backtesting and other forms of event-driven trading strategies are today only accessible to the highly technically competent, or institutional investor, out of reach of the average retail trader. Tradewell promises to bring them to the masses. I am excited to support Dan and the team on this mission.
Why this deal in Incisive
Tradewell ranks very highly in key areas of our Meta Themes.
Disruptive innovation creates new markets. Charles Schwab disrupted traditional high fee stock brokers. Then Robinhood, Public.com and others came in to disrupt Schwab. Each time the disruptors innovated and brought in new customers poorly served by the incumbents. Tradewell’s innovation of easy to use backtesting promises to appeal to a whole new category of active retail investors. This is a whole new market.
Americans love being lazy. Backtesting today is very complicated and expensive. Programming takes time and effort. Tradewell’s platform is intuitive and easy to use. It allows me to achieve my trading goals with less effort. It enables me to be lazy.
Platforms Win. Tradewell is a platform for multiple asset types connected to multiple data sets. While targeted at major market equities today, over time they intend to expand to alternative assets like Crypto, currencies and other assets. The platform will get more valuable over time.
Great founders figure it out. Dan built Tradewell for himself. As the platform has expanded to beta users, he is responding to customer feedback and adding data sets and features that the market demands. He is building in public. He figured out what he wanted and is upgrading it with customer feedback. This is a hallmark of a great founder.
Invest with other smart people. Angel investor Allen Gannett introduced me to Tradewell and was the first investor in the company. We have known each other some time and have been batting around ideas to co-invest together. I have been impressed by Allen’s approach to evaluation opportunities and his Seneca like judgement of founder character. I am excited to join him in supporting Tradewell along with other leading angels.
Trends we are betting on.
The Retail Investor revolution. 2020 was clearly a breakout year for retail investors. Millions of new accounts were created and those investors started consuming services like TradingView in large numbers. I am betting that these retail investors are here to stay and more join them. I am also betting that these investors will demand ever more complex trading strategies. Much more complicated than trolling Reddit forums. As these investors mature, I believe they will search out tools like Tradewell to uplevel their trading.
Simplification Wins. Software is great at taking very complex processes and making them simple. Call a cab company and try to explain to a cab where to pick you up, or push a button on your Uber app? Drive to a store, walk the aisles, stand in a check out line, or push some buttons on your Amazon app? Build your own data center, or connect to the cloud whenever you need compute power? Backtesting is very complex today. Tradewell makes it simple and available anywhere to non-technical users. Simplification will win.