Alpaca – Commission-Free Stock Trading API for Developers Raises $10M in Series A


Founded in 2015 by Hitoshi Harada, Yoshi Yokokawa and Yuki Hayashi, Alpaca, a commission-free (SEC and FINRA fees apply) stock trading API for developers to build and integrate with custom & 3rd party stock trading applications and services, was added to our portfolio last year and we are glad to share that now it has also raised $10M in Series A.

The funding round was led by Portage Ventures in participation with Social Leverage, Spark Capital, Fathom Capital and Abstract Ventures. Including this Series A, the total funding amount of Alpaca has reached $21.8M.

It’s done a lot with the pre-existing funds, including driving its transaction volume sharply higher over the last year. As we’ve seen with commission-free broker Robinhood, transaction volume can be robustly lucrative. In a prior interview with Alpaca CEO Yoshi Yokokawa, the startup confirmed that it generates revenues from routing order flow through specific market makers.

So, as Alpaca’s trading volume grows, so too does its revenue. This matters as we have notes on Alpaca’s trading volume in 2020, and how some of those figures compare to its 2019 results. The data helps explain why, and how the startup attracted new capital.

Here’s the startup’s historical trading volume in dollars, generated via customers’ use of its API:

  • January: $388.1 million
  • February: $591.4 million
  • March: $999.0 million
  • April: $853.6 million
  • June: $1.59 billion
  • July: $1.58 billion
  • August: $959.3 million
  • September, 2020: ~$2 billion

Per the company, that $2 billion result in September is up 10x its year-ago performance, implying that revenue at Alpaca has soared in recent quarters. Fast revenue growth, and possible 10x revenue expansion, is investor catnip. The company’s Series A, therefore, is not a surprise event.

Alpaca has gone fully remote and is taking its fresh cash to hire around the world. I asked the CEO if he was adding mostly, say, in-market salespeople as Alpaca looks to expand its customer base globally. He responded that most of its distributed hires have been developers, though some have been marketers as well.

After reducing staff to around 10 when COVID-19 arrived, Alpaca is now 35 people strong. Those folks will help Alpaca grow across two vectors, namely geographic expansion and growth into the enterprise, powered by API development. The company’s work on broker-dealer features is part of its international growth plan.

Please read full story at TechCrunch.