OpenGamma, the open source financial software pioneer and leading provider of derivatives risk analytics, has raised over $13.3 million from institutional investors. The funds will be used to address increasing demand from financial institutions for more efficient use of capital and technology resources. By deploying an innovative range of software-as-a-service (SaaS) solutions based on an open source library of standardized derivatives pricing and risk models, OpenGamma is offering a more cost-effective and nimble alternative to legacy, enterprise-wide platforms.
Accel and ICAP are leading the funding, with additional investment from financial technology pioneer, Cristóbal Conde. Conde joined the OpenGamma board in 2014 as an independent non-executive director and is most well-known in his role as President and CEO of SunGard, where he grew the firm over 12 years to become the largest private software and services company in the world.
OpenGamma’s solutions address the needs of over-the-counter (OTC) or privately-negotiated derivatives contracts, a $493 trillion marketplace as of end-2015, according to the Bank for International Settlements. The majority of these contracts must now be cleared with a central counterparty; U.S. regulations introduced in September 2016 require even uncleared derivatives to be collateralized. This has increased the complexity and cost of accurately and efficiently allocating capital and resources across derivatives businesses.
“While OpenGamma cut its teeth on open source software, they have embraced the broader shifts in technology,” said Bruce Golden, partner at Accel, a leading global venture capital firm. “By focusing on delivering the best-in-class cloud-based, modular solutions for the financial markets, the firm is positioning itself to become the market standard for derivatives risk analytics.”
“Our commitment to OpenGamma reflects our belief that the derivatives markets are embracing innovative solutions to address capital and operational challenges,” said Jenny Knott, CEO of ICAP’s Post-Trade Risk and Information Division. “It also aligns with our strategic focus on market structure that enables clients to optimize their regulatory and financial resources.”
ICAP’s participation is led by Euclid Opportunities, ICAP’s investment arm focused on emerging fintech companies.
During the past two years OpenGamma has built a comprehensive open source library for standardized derivatives analytics. This forms the foundation of its ‘risk-as-a-service’ analytics solutions, the first of which enables users to accurately measure and compare margin requirements across cleared and non-cleared derivatives. OpenGamma offers three services to its growing list of bank, clearing house and buy-side clients: open source libraries, custom solutions and risk products.
“OpenGamma possesses a rare blend of deep domain knowledge, technological acumen, and the proven ability to quickly deliver production-ready solutions to a broad range of industry participants,” said Conde. “As both an advisor and an investor in the firm, I’ve doubled down on my commitment to helping the firm achieve its important and highly achievable goals.”
“We’ve demonstrated that we are an innovative and effective developer of technology solutions for the financial community,” said Peter Rippon, newly-appointed CEO of OpenGamma. “This investment now lets us build from these solid foundations to become a world-class partner and provider of benchmark industry solutions.”
Rippon joined OpenGamma in 2014 as COO, after spending two decades in financial software development management at firms including Lehman Brothers and SunGard. Former CEO Mas Nakachi will become Vice Chairman, focusing on OpenGamma’s global network of executive relationships and reinforcing its leadership in providing market structure solutions.
Founder and open source pioneer Kirk Wylie recently left the firm to pursue other business interests.