Lyapunov Technologies to Provide Automated Risk Management
In early February, when the stock market hit a
brick wall, University of Delaware graduate students Anthony Rossi and Duanyi Wei watched to see how their model would respond. Built on robotics engineering principles – a new field, when applied to financial markets – the model worked: the output shifted from bull to bear, accurately mirroring real-world events.
“It kicked in, fully autonomously, and it was able to capture some of the downside,” Rossi says. “It was a great opportunity to show where our value comes in, essentially hitting the brakes when your strategy is going in the wrong direction.”
Rossi and Wei met doing research at the University of Delaware robotics lab, and have refined their business concept through the school’s Horn Entrepreneurship program. “We’re a financial technology firm focused on risk management and innovation in data analytics,” Rossi says. “We serve large, institutional investment firms that deal with the perpetual problem of risk in the secondary market.”
During a recent interview, the partners were fresh off a trip to SXSW in Austin, Texas, where they made it to the final round in a highly competitive pitch competition. They were also finalists in UD’s 2018 Hen Hatch competition. Their burgeoning firm is called Lyapunov Technologies – named after mathematician Aleksandr Lyapunov, who authored the founding theorem in Control Theory. “He was way ahead of his time,” Rossi says.
Control Theory underlies much of robotics engineering and is typically used to mitigate risk in complex mechanical systems for things like cruise control, autopilot and nuclear power plants. “Control Theory is built for systems to handle uncertainty, but they don’t know when and where that uncertainty will happen,” Wei explains.
“We don’t know when the market will have a downturn or upturn, but we built our system to respond in real time and in a robust way to any disruptions.”
The partners dreamt up the idea; Horn Entrepreneurship, they say, helped them develop it. “They’re open to anyone on campus who has a venture or concept they want to work on,” Rossi says, noting that the real-world feedback they’ve received from business leaders in the program has been invaluable. “I don’t think we’d be even close to doing what we are without that.”
Rossi and Wei are nearing graduation. The next step for Lyapunov Technologies is to take on customers. “We started from complete scratch,” Rossi says, “and now it’s something that is very real.”