Cohen's Point72 Starts Venture Unit to Fund Financial Technology

  • Unit will provide money, testing grounds for fintech startups
  • Artificial intelligence `coming but not here yet,' Cohen says

Billionaire Steven Cohen’s investment firm is starting a venture capital unit to fund and help develop financial technology for asset managers.

Cohen’s firm, Point72 Asset Management, set up the new investment vehicle in March under the name Point72 Ventures, according to documents filed with the Delaware Division of Corporations. It will provide early stage capital, along with advice and feedback, to startups in fields such as data mining, artificial intelligence, and machine learning.

The move reflects the growing importance of technology to money managers such as Cohen, who started a data crunching unit last year and hired an executive from International Business Machines Corp. to run the operations of Point72, a family office that oversees about $11 billion for Cohen and members of his firm. Point72 hopes to both turn a profit from its venture investing and gain an edge trading in financial markets.

“This is not just about writing checks,” said Matthew Granade, the chief market intelligence officer of Point72, which is based in Stamford, Connecticut. “We want to do this in spaces where their products can help us invest with greater insight.”

Point72 Ventures will be led by Granade and Peter Casella, a veteran of JPMorgan Chase Strategic Investments and Credit Suisse Principal Investments who specializes in acquiring venture capital stakes in fields such as financial technology, enterprise software and market structure.

Testing Ground

Point72 Ventures plans to invest in several dozen companies each year, providing suitable candidates with seed money or participating in their initial phase of venture capital fundraising. In addition, Cohen’s family office will serve as a testing ground for the products and services that these ventures are creating, thereby providing them with feedback to perfect the technology.

Technology stalwarts such as Cisco Systems Inc. and Intel Corp. have long employed internal venture capital arms as a way to foster the growth of technology that might one day contribute to their main products. The concept has also gained traction in the banking sector, where many institutions have formed internal funds to invest in financial technology, one of the faster-growing venture capital sectors.

“We are in the early days of asset managers doing anything with regard to FinTech,” said Robert Gach, managing director for the capital markets group at Accenture Strategy. “A lot of the banks are further ahead on this.”

Project Aperio

Cohen said on Monday that artificial intelligence is “coming but not here yet” and that it will be “a while” before the technology displaces humans.

“The way it will affect this industry is that some tasks will be automated but ultimately it will be humans adding value at the top,” Cohen said at the Milken Institute Global Conference in Beverly Hills, California. “It will be a combination effort.”

Cohen is better known for wagering on publicly traded stocks than private startups, having generated average annual returns of about 30 percent for almost two decades at his former hedge fund, SAC Capital Advisors. After SAC in 2013 pleaded guilty to securities fraud and agreed to pay a record $1.8 billion fine, Cohen returned the capital he managed for outside clients and converted the firm into a family office that was renamed Point72.  

The family office increased its focus on technology last year, hiring about 30 people for Aperio, a project to crunch publicly available data in order to find patterns that would better inform the firm’s stock trading. Last May, Point72 Asset Management also announced that its new chief operating officer would be Timothy Shaughnessy, who formerly served as IBM’s senior vice president for global technology services solutions. 

Cohen has been making personal investments in privately traded companies and assets for many years. In March 2014, he set up Cohen Private Ventures to house these investments, which range from private equity and venture capital to structured securities, specialized credit investments and real estate, according to Point72’s website.

Cohen Private Ventures has a broad mandate to invest in all types of businesses at various stages of development. In contrast, Point72 Ventures will focus on early stage investing in companies that are developing technology related to Cohen’s main line of business.

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