For Steve Zheng and Olivier Porté, two MBA students at Harvard Business School, the opportunity to start local startup Alpha Vantage started with a question; a question that, unnoticed to many, was flooding the online forums of the software developer community in late 2017.
"What the hell happened to Yahoo Finance's API?"
Provided for free, Yahoo Finance's API was a tool that allowed fintech developers, individual investors, startups and even Fortune 500 companies to obtain real-time financial data (like stock prices) for their websites, intranets and apps. Unexpectedly, a critical piece of software that allows developers to get financial data (for free!) to build their own applications simply disappeared from the radar.
By the time Yahoo Finance confirmed it discontinued the service (in a blog post dated May 2017 on their forum), Alpha Vantage was already up and running, ready to serve "the survivors of the ship wreck of Yahoo Finance," as Porté said.
Porté said that initially, users found Alpha Vantage simply typing on "stock API" on Google. It didn't happen by chance; his co-founder Steve Zheng, a former program manager at Microsoft's AI and Search division, leveraged his domain knowledge to optimize the ranking of Alpha Vantage on major search engines.
An MIT-trained computer scientist, Zheng is also the "technical brain" behind Alpha Vantage. He built the API service from scratch and made sure it could scale with the rapid user growth.
Currently, the company said it provides a suite of fintech software services for over 100,000 registered users, who make more than 300 million API requests on a daily basis.
Started in March as part of the Fall 2017's Rock Accelerator class, Alpha Vantage made it to this summer's Y Combinator program, the Silicon Valley-based accelerator that has a reputation for not not being a fan of MBA-holding founders. Now in Mountain View for the summer, the team will be back in Boston at the end of the program.
The market for financial data providers is, as it's easy to imagine, huge. The spend on market data, analysis and news has topped $27 billion for the first time last year, according to a recent report. Main players in this field are Thomson Reuters and Bloomberg, which can sell its signature Bloomberg Terminal for more than $24,000 a year.
"[Steve and I] had a shared vision: democratizing access to data, making it more affordable," Porté said. "Investors are using our data to help them with their trading decisions, whereas developers integrate our API to create various digital assets."
As Porté explained, an API piece of software is "like a waiter inside a restaurant." The API software communicates with other software on the Web and brings back to users not food, but the data they needed: cryptocurrency data, currency exchange rates, real-time stock market data and historical market data.
In other words, Alpha Vantage crowdsources data and presents it to users in a developer-friendly way. Sources for Alpha Vantage are third-party data vendors and public domain. The same data would be available on exchanges like Nasdaq and NYSE, but it's too expensive to get.
"We aggregate that data, we clean it, we normalize it," Porté said. "It gets unified in a one-stop solution."
There's more: Zheng, who built the technical architecture of Alpha Vantage, augmented the infrastructure with supervised machine learning algorithms that continuously improved the data quality based on user feedback. The more users use Alpha Vantage, the "smarter" its technical stack becomes.
To date, Alpha Vantage - which just started working on a freemium model for its services - raised a total of $720,000 from Flybridge Capital in Boston, Y Combinator and other investors.
