Increase Alpha, an emerging fintech company founded by Sid Ghatak, a former AI policy advisor for the U.S. government, has raised $3.5 million in seed funding. Bartt Kellermann, the CEO of Battle of the Quants, led the funding round. This funding will support the launch of their proprietary equity predictive signal engine designed for hedge funds and institutional investors.
The center of Increase Alpha’s offering is its Predictive Artificial Intelligence (PAI). The predictive engine has demonstrated outstanding performance, generating a cumulative excess return, also known as “alpha,” of 90% over the past three years. In contrast to the typical accuracy rate of 52-55% that most hedge funds aim for, Increase Alpha’s technology identifies a tradable set of hundreds of equities with an impressive average accuracy of 70%. This high level of accuracy positions Increase Alpha as a standout player in the financial sector, allowing it to spot lucrative trading opportunities quickly.
One of the significant advantages of Increase Alpha’s predictive engine is its seamless integration into existing investment strategies. Unlike many other alternative data providers, which often require extensive internal data cleansing or signal processing, Increase Alpha’s engine is ready to use right out of the box. This ease of use is likely to attract hedge funds looking for efficiency in their trading processes.
Adding further credibility to its launch, Increase Alpha is gaining attention within the financial community. For instance, Zanista, an AI-powered financial analytics firm, recently published a research paper titled “Increase Alpha: Performance and Risk of an AI-Driven Trading Framework.” As part of its promotional efforts, Increase Alpha also sponsored the Eagle Alpha conference, where it had the opportunity to formally present its product to participants in the hedge fund industry. Additionally, Sid Ghatak’s testimony before Congress on the development of AI solutions for enhancing veteran care underlines the company’s commitment to leveraging AI for broader societal benefits.
The timing of Increase Alpha’s launch coincides with a growing interest among financial institutions in utilizing Generative AI to inform trading strategies and identify alpha. However, many existing large language models (LLMs) remain in experimental stages, struggling to tackle the complexities of capital markets. These models often lack the needed transparency and are subject to problems like hallucinations. A recent MIT study found that the financial services sector has seen minimal structural change following the implementation of Generative AI, highlighting the need for more effective solutions.
In contrast, Increase Alpha’s Predictive AI platform has been specifically designed for the financial markets, intentionally avoiding reliance on LLM technologies. The engine has undergone rigorous development and testing to eliminate bias, deploying proprietary indicators that have been empirically validated to influence stock prices.
It is trained solely on public, compliance-grade data, enabling it to transform complex company disclosures and market signals into accurate, institutional-quality predictions. This methodology helps sidestep common issues faced by traditional backtesting methods, such as hallucinations, overfitting, hindsight bias, and cherry-picking.
Increase Alpha originated from a long-term research project conducted at Villanova University, where founder Sid Ghatak served as a professor. The foundational hypothesis was that when the correct public data is paired with an effective predictive engine, it can consistently predict stock market movements. This approach has been rigorously validated through eight years of academic research and four years of real-time trials. At present, several of the world’s largest hedge funds are piloting the predictive engine, with licensing discussions already in progress.
Sid Ghatak brings a wealth of experience in AI governance and fintech to Increase Alpha. Currently, he serves as the Chief Technical Advisor for the National Artificial Intelligence Association and collaborates with both The White House and Congress on the formulation of AI-related legislation. His previous role as Director of the Data & Analytics Center of Excellence at the U.S. General Services Administration involved co-authoring the federal AI Maturity Model, designed to support AI adoption within the public sector.
Following this seed funding round, Increase Alpha’s focus is now shifting towards executing its go-to-market strategy. The company aims to collaborate with hedge fund managers, Chief Investment Officers, and data buyers, helping them explore the product for technical validation and comprehensive business understanding.
In its early development stage, Increase Alpha has already initiated pilot programs and trials with several leading hedge funds, with plans to onboard even more clients in the near future.
KEY QUOTES:
“In an industry where unique, uncorrelated, and consistent alpha has become increasingly rare, we’ve demonstrated that it’s not only possible, but scalable.”
Sid Ghatak, Founder and CEO of Increase Alpha
“We are at an inflection point in fintech where predictive AI will become fundamental to investment strategies. With years of academic research and real-world trials, Increase Alpha now delivers proven predictive capabilities that institutional investors can trust. Our goal isn’t to just create another model, but redefine how AI technology is applied in finance.”
Sid Ghatak, Founder and CEO of Increase Alpha
“After seeing how Increase Alpha merged AI, data and hedge funds I decided to invest. This combination is so completely unique and effective that they have the potential to reimagine the entire hedge fund space.”
Bartt Kellermann, CEO of Battle of the Quants
