Despite the current volatility in the market, the U.S. stock market remains a magnet for global investors due to its immense size and liquidity. However, trading on U.S. exchanges can pose challenges for international investors. To address this, San Mateo-based startup Alpaca has developed an API that allows financial services firms to offer trading services to their clients.
Alpaca proudly claims to support over 5 million brokerage accounts globally and has established partnerships with more than 200 financial clients across 40 countries. Recently, the company announced it had raised $52 million in a Series C funding round, which aims to facilitate its expansion into new international markets such as the Middle East, Europe, and Asia.
Funding contributions came from a mix of new and existing investors including Derayah Financial, 850 Management, and Portage Ventures. With the financing secured, Alpaca plans to open a new office in New York and is keen to acquire regulatory licenses across various regions, building on its already existing licenses in the U.S., Japan, and the Bahamas, as revealed by co-founder and CEO Yoshi Yokokawa.
Yokokawa emphasized the importance of this funding round as a pivotal moment for Alpaca, enabling it to transition from a U.S.-centric platform to a global financial infrastructure. The funds will also support the creation of new products that cater to non-U.S. markets and enhance the firm’s capability for around-the-clock trading of U.S. stocks.
With the Series C round, Alpaca’s total funding has reached $170 million. Founded by Yokokawa, a former investment banker, and Hitoshi Harada, Alpaca began by offering software for financial service firms to create trading platforms compliant with local regulations globally. As Yokokawa explained, the aim was to facilitate investment opportunities outside of the U.S. while ensuring compliance with respective regulations.
The firm has gradually broadened its portfolio to include trading of stocks, ETFs, options, and high-yield products, and recently collaborated with Kraken to enable users of the crypto exchange to trade U.S. stocks and ETFs in select states.
Since securing its Series B extension in October 2023, Alpaca has seen its revenue and assets under management triple, with trading volumes quadrupling. It has also transitioned to being a fully self-clearing broker-dealer with DTCC membership, allowing Alpaca to manage trading and settlement processes independently.
Yokokawa acknowledges Interactive Brokers as a main competitor, particularly regarding its technological capabilities and international presence. However, he believes Alpaca’s modern solutions attract banks seeking to better serve their customers compared to older systems like those of Interactive Brokers.
Currently, Alpaca employs around 200 people, many of whom work remotely from diverse locations around the globe, marking its commitment to modern working practices.
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