Orpheus MIT Capstone Project

Mukul Pal ·

BP
Executive summary

  • What is the idea?

The investment management industry is like a Fruit Basket [2]. The manager is searching for superior returns at the same risk level. The Orpheus Risk Management Indices (RMI) [3] ability to deliver risk-weighted excess returns, which can also be understood as outperformance of the RMI portfolio vs. the market portfolio, is owing to the underlying architecture of the Mean Reversion Framework [4].

  • What is the business or product?

Orpheus has created an artificial intelligent data innovation which allows it to build Smart Beta [5] Indices for cross assets, multiple region and various investment styles. Orpheus delivers these solutions using a tech web application called Tralio [6].

  • Why the business is relevant to consumers (how it fills a gap in the market or creates a new market entirely)?

The Smart Beta companies started in 2002 are coming out of the Market Introduction stage [7a] in the product life cycle [7b] and are now entering the Growth Stage [7c]. The entry barriers are high and hence the startup’s ability to carve its niche while there is a need for new innovations creates an attractive opportunity for Orpheus to capitalize. The market has a few problems, which the business addresses. First [8]; Both the Beta and Smart Beta market is focused on Equity and not on the group of assets like currency, commodities, bonds and alternatives. Second; Both Beta and Smart Beta is primarily for an up-trended market and will be hit in case of another crisis or secular downside in the market. Third; Nobel Prize winning academicians backing admit that they cannot explain the pillars on which their hypothesis is based. This is what Orpheus calls the ‘Fruit Basket Paradox’ [9] which it resolves by simplifying the process of allocation among a group of stocks.

  • Reasons why the new venture or product is likely to be successful?

The new venture owing to its superior product [10], other innovations on delivery and double digit potential patent pipeline allows Orpheus to offer a clear value proposition to global fund managers.

  • Some high level financial projections and an explanation of the amount of capital Orpheus seeks to raise and how the business plans to use it.

At the AuM (Assets Under Management) [11] projection of USD 4 billion under the various business pipelines, Orpheus expects to generate a fee of USD 12 million annually in 2020 and seeks USD 5 million funding. Since the product is ready and generating revenue, the money is required to scale up the business by spending on sales, patents and trademarks, research and technology.
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