Peter Lin, Ph.D., a Taiwanese academic turned entrepreneur, founded asset management company, Gamma Paradigm Capital, in New York five years ago.
The 36-year-old and his small team create quantitative investing strategies to help customers manage their financial assets. It’s an investment approach that uses complex computer models to make trading decisions.
Speaking to Business Next at his firm’s New York headquarters Lin shared his experiences of being a Taiwanese entrepreneur in the Wall Street financial district while working as a professor of financial engineering at Stevens Institute of Technology.
Q: Tell us about your business?
A: We provide financial services research and consulting services to customers involved in Wall Street’s wealth management industries.
We use modern portfolio theories, big data analytics and advanced computer algorithms to analyze U.S. equity markets, exchange-traded fund markets and bond markets. I believe my customers and investors can make money in the market by analyzing statistics.
At present, the current fund size of Gamma Paradigm Capital is about US$1.5 million. The firm hopes to raise US$20 million in a hedge fund by the end of the year. We have two offices – one in New York with three staff and one in Taipei with six.
Over three years we achieved a Sharpe ratio of 2.25 (a way of measuring the historical risk-adjusted return on an investment.) Investors usually consider that a Sharpe ratio of 1.8 to 2 is very good; more than 2 is excellent.
Q: What advice would you give to would-be Taiwanese entrepreneurs?
A: Many Taiwanese founders are confident about their core technologies. But I’d like to stress that having solid technologies doesn’t always translate into success in the marketplace.
In fact, it is even more difficult to prove yourself if you’re only focusing on the Taiwanese market. The reason for this is many large banks and funds are still eyeing American universities and American research institutions, essentially, whatever’s happening in the U.S.
So, instead of boasting about your technologies, I think it’s more important to talk about what are some of the key customers’ “pain points” that you’re going to solve.
In addition, Taiwan’s financial system is still relatively strict and bureaucratic compared with the U.S. When Taiwanese banks or institutions make investment decisions, they tend to be more cautious. However, U.S. financial institutions have an entirely different attitude towards investing in a startup company.
Q: I learned that you’re also a university professor. There seems to be quite a few of people who made the leap from professor to entrepreneur. What’s your view on this?
A: There are some good examples of successful businesses that were created by university professors. James Simons, the founder of Renaissance Technologies, is a great example. He is a legend in the math community. While spending time thinking about difficult math problems, he also is in charge of one of the world’s largest quantitative hedge fund firms.
People like Simons bring their experience (to the industry and) a broader perspective to the world. I think that’s great for creating best practices and it’s also a trend that I see in New York’s financial sector.
(Source: Business Next on 2018.08.01)