Michael Wang

CEO @ Prodigy Research (YC S26)

[Michael Wang @michaelwangelo]

hey, Michael from Prodigy Research (YC S26) again

Our launch has made the rounds and produced a lot of discourse. Much of it is around a few particular questions: if you have alpha, why raise money at all? and why do YC in particular? I’ll tackle these in order.

First, why raise money at all if you have alpha?

The short answer is that we are raising money for the same reason any business raises money.

There is a lot of what I would call “magical thinking” about trading. Many people have a mental model where a profitable trading strategy is like a magic faucet. You turn it on and unlimited money comes out, simple as. If this were the case, it would be irrational for the owner of such a faucet to raise money. If more money is needed, simply get it out of the faucet.

But in fact, it takes capital to convert alpha to dollars! Prodigy is training models and building the machine that generates alpha. Capital allows us to convert alpha to dollars faster and more efficiently, do bigger and better training runs with more compute, conduct more model inference and research, build infrastructure that allows us to do more demanding kinds of trades, and generally grow the pie faster in a win-win way.

So we could recast this question as: “if you have [the core of a really profitable business], why raise money?”

You will notice that this is an argument against raising money in general. A business can be profitable today (as Prodigy is) and yet have extraordinarily high-return opportunities in which to invest marginal dollars. If a dollar spent on compute today can create far more than one dollar of long-term business value, then it is much more rational to raise that dollar than to deliberately grow more slowly to avoid fundraising.

That brings us to our second question: why raise from YC in particular?

Prodigy can build and grow much faster with more compute, and raising equity capital gives us the flexibility to do that. We could have raised outside of YC, but YC offers us things like access to incredibly ambitious founders, partners who know an enormous amount about building companies, and many other resources from which we have already derived a huge amount of value.

We’re heads-down building right now, and we’re super excited about scaling quant trading beyond human limits.

[email protected]

@realProdigyCorp