TLDR: Fintech startup Increase Alpha has successfully raised $3.5 million in seed funding to launch its proprietary AI-driven equity prediction engine for hedge funds and institutional investors. The funding round was led by Bartt Kellermann, CEO of Battle of the Quants. The company’s Predictive Artificial Intelligence (PAI) technology boasts a 90% cumulative excess return over three years and an impressive 70% prediction accuracy across hundreds of equities, significantly outperforming industry averages.
Increase Alpha, a New York-based fintech startup, has announced the successful closure of a $3.5 million seed funding round. This capital infusion is earmarked for the launch and expansion of its cutting-edge AI-powered equity prediction engine, specifically designed to serve the needs of hedge funds and institutional investors. The funding initiative was spearheaded by Bartt Kellermann, the prominent CEO of Battle of the Quants.
Founded by Sid Ghatak, a former U.S. government AI policy advisor, Increase Alpha’s core offering is its proprietary Predictive Artificial Intelligence (PAI) technology. This advanced engine aims to revolutionize how financial institutions identify and apply predictive signals within their trading strategies. The company asserts that its system has generated a remarkable 90% cumulative excess return, or ‘alpha,’ over the past three years.
In an industry where predictive accuracy is paramount, Increase Alpha claims its model achieves approximately 70% accuracy across hundreds of equities. This figure stands in stark contrast to the typical aspirations of most hedge funds, which generally aim for a predictive accuracy of around 52–55%. The company highlights that its engine exploits an information gap to identify a tradable set of equities with this high level of precision.
Sid Ghatak, Founder and CEO of Increase Alpha, emphasized the significance of this development, stating, “In an industry where unique, uncorrelated, and consistent alpha has become increasingly rare, we’ve demonstrated that it’s not only possible, but scalable.” He added, “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.”
Bartt Kellermann, the lead investor, expressed his confidence in the venture, remarking, “After seeing how Increase Alpha merged AI, data and hedge funds I decided to invest.”
The genesis of Increase Alpha traces back to a long-term research project at Villanova University, where Ghatak served as a professor. The foundational hypothesis posited that combining the correct public data with the right prediction engine could consistently forecast stock market movements. This methodology has been rigorously validated through eight years of academic research and four years of real-time trials. The predictive engine is currently being piloted by several of the world’s largest hedge funds, with licensing discussions actively underway.
The launch comes at a pivotal moment for the financial industry, which is actively exploring Generative AI tools for trading and analysis. However, many existing Large Language Model (LLM) solutions remain experimental, often struggling with accuracy, transparency, and reliability. A recent MIT study noted that most Generative AI initiatives in finance have led to ‘little to no structural change’ due to these inherent limitations. Increase Alpha’s focused approach with its PAI technology positions it as a distinct player in this evolving landscape.
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Recent activities underscore the company’s momentum. Zanista, an AI-powered financial analytics firm, has published a research paper titled ‘Increase Alpha: Performance and Risk of an AI-Driven Trading Framework.’ Increase Alpha also formally introduced its product to the hedge fund industry at the Eagle Alpha conference, and Sid Ghatak testified before Congress on developing AI solutions for veterans’ care. Following this seed round, Increase Alpha is concentrating on its go-to-market execution, engaging with hedge fund managers, Chief Investment Officers, and data buyers for technical validation and business understanding, with several top-tier funds already participating in pilots and trials.
