Steven Cohen’s venture firm joins banks with cloud startup investment
October 12, 2016
By Anna Irrera
Point72 Ventures, the venture arm of billionaire Steve Cohen’s investment firm, has joined a consortium of investors in backing a New York-based fintech startup that helps trading firms replace their legacy telephone systems with a cloud-based application.
Cloud9 Technologies has raised $30 million from the group, which includes existing investors JP Morgan, Barclays and Icap, it said on October 12. Trading firm Hudson Ridge Asset Management, one of the startup’s early clients, also joined the financing round.
JP Morgan, Icap and Barclays made initial seed investments in the company in April.
The new money will be used to help Cloud9 extend its offering to investment banks and move into new markets. It recently opened an office in Singapore.
Running in a similar way to the popular voice communication app Skype, Cloud9 technology provides a cloud-based desktop service that replaces the phone systems traditionally used by traders. It is supported by Amazon’s cloud infrastructure, which has been growing in popularity among large financial institutions.
Jerry Starr, the chief executive and co-founder of Cloud9 Technologies, said: “The problem is traders use very expensive telephone systems, the lines are very convoluted. We said ‘let’s take a fresh sheet of paper and figure out how to solve the problem’.”
Cloud9 claims its product is around 50% cheaper than the traditional phone-based systems, is more secure and offers better audio quality.
Michael Intrator, president and CEO of Hudson Ridge Asset Management, said in a statement: “We have been using Cloud9 since the beginning. We chose to invest in Cloud9 because the technology has been reliable, and transformative for us.”
Launched in 2014, the startup initially serviced energy traders and later expanded into the interdealer-broker market. It now has around 2,700 users in more than 29 countries and recently launched a new feature connecting Cloud9 users to trading counterparties not using the system.
The move comes as capital markets firms warm to the idea of moving their applications to public cloud providers, such as Amazon Web Services. Goldman Sachs is an investor and a client of Bracket Computing, a startup that provides an additional security layer around public clouds.
Richard Kerschner, chief corporate development officer of Icap’s post-trade, risk and information services division, said in a statement: “The rapid growth of Cloud9 since the company’s launch in 2014 has paralleled the industry’s adoption of cloud technology and we’ve seen the opportunity to extend the platform’s benefits into areas such as workflow, compliance and advanced analytics.”