Alpaca Raises $6 Million to Let Developers Build Their Own Stock Trading Apps
Fintech startup Alpaca provides a free API that handles banking and regulatory hurdles so developers can easily build their own stock trading platforms. The company earns revenue through payment for order flow and interest, surpassing $1 billion in transactions within its first year.
Stock trading app Robinhood holds a massive $7.6 billion valuation in the United States, but newly funded startup Alpaca enables developers worldwide to build their own competing investing platforms. Operating much like the Stripe of stock trading, Alpaca’s API manages the complex banking, security, and regulatory requirements so that other startups can quickly launch brokerage applications for free. The platform already processes over $1 billion in transactions just one year after its initial launch.
This potential to power the backend infrastructure of a new generation of fintech apps attracts a $6 million Series A funding round led by Spark Capital. Instead of charging developers to use the service, Alpaca generates its revenue through payment for order flow, interest on cash deposits, and margin lending. The company also offers supplementary products like AlpacaForecast for stock price predictions and AlpacaRadar for detecting price swings.
CEO and co-founder Yoshi Yokokawa, a former Lehman Brothers employee who later spent three years day-trading, launches Alpaca to democratize wealth-building tools historically reserved for the rich. International developers and small hedge funds currently build on top of the Alpaca API to avoid reinventing the underlying financial infrastructure. The new funding adds to a previous $5.8 million raised from investors including Y Combinator, positioning the startup to expand its global reach.