Point72 Ventures, the early-stage venture capital arm of Steven Cohen’s Point72 Asset Management, and Resolute Ventures have closed on a $4.1 million seed funding round for AlphaFlow, a real estate finance startup.
AlphaFlow is an online investment service that connects lenders and investors, including money managers, allowing users to invest in a diversified portfolio of real estate loans. The firm uses data and analytics to identify loan investment opportunities and create diversified income-producing portfolios that are an alternative to high-fee and traditional real estate investing. AlphaFlow targets endowments, pension funds, registered investment advisors, wealth managers, and other independent investors.
The start-up plans to use the seed money to add to its data science and engineering team, which is developing analytics and investment algorithms. The company was founded two years ago by Ray Sturm, the co-founder of crowdfunding real estate platform RealtyShares.
Sturm started AlphaFlow as an online alternative to crowd funding, where investors need to do their own due diligence and be actively engaged in choosing opportunities.
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After starting RealtyShares in 2013, Sturm says he learned investors wanted a service that provided more loan analysis — and allowed them to take a more passive role in the process.
“We take the hard part off investors’ plates,” Sturm tells Institutional Investor.
Within days of receiving investors’ money, AlphaFlow provides a portfolio of between 75 and 100 different loans from around the U.S. AlphaFlow does not originate the loans. Instead, it works with online and local lenders for deal flow, re-underwriting their loans and ultimately investing in about one in ten of these.
Other participants in the funding round include Clocktower Technology Ventures, an affiliate of Drobny Capital; Upside Partnership; Social Capital; Y Combinator; and Red Swan Ventures.
The investment in AlphaFlow is the latest for Point72 Ventures, which backs entrepreneurs who are building businesses around financial technology advancements and artificial intelligence. Other companies in its portfolio include Pico — which provides market data services and infrastructure for investment banks, hedge funds and others — and Quantopian, a platform that allows anybody to submit a promising investment algorithm and get paid for it based on performance.
