Insider Brief
- Jordan Fowler and Carter Burns head up the Shaw Circle, a hedge fund based in South Carolina.
- The team is exploring the use of quantum computing to optimize risk management and investment strategies, some of which are too complex for classical computation to handle in a timely fashion.
- Fowler and Burns credit South Carolina Quantum and mentors at the University of South Carolina with introducing them to the potential of quantum computing in finance.
- Image: Shaw Circle team meets with Columbia, SC city council members and mayor. The SC Quantum team has been helpful connecting the team with contacts across the science, business and policymaking spheres.
While many graduating finance students immediately packed up and headed to the trading desks of Wall Street and the derivatives market in Chicago, Jordan Fowler and Carter Burns are staying right in South Carolina.
The two hedge fund startup founders believe that the approaching promise of quantum computing and the nurturing entrepreneurial ecosystem in the state will give them a competitive edge that even these big city business centers can’t match.
Fowler and Burns said that they combined their passion for financial algorithms and trading with the potential of quantum computing, thanks to a collaboration with SC Quantum.
The Partnership with SC Quantum
The partnership between SC Quantum and the University of South Carolina entrepreneurs has been important for the burgeoning hedge funders, said Fowler. He lists SC Quantum’s help in connecting the team with initial funding, providing a range of support services and facilitating connections with industry leaders and academic institutions as critical to their business.
Ultimately, the collaboration helped the Shaw Circle hedge fund team position itself to leverage quantum computing in ways that are just beginning to be understood in the financial sector. Once fully developed, experts believe quantum computing can optimize financial tasks like derivative trading by rapidly analyzing vast amounts of data and complex models to identify optimal trading strategies and suggest risk management solutions. These tasks are just too large for today’s classical computers to be practical.
“When we launched our fund in 2022, we had a successful first year, but we definitely ran into a bottleneck with our technology,” said Fowler. “We focus a lot on derivatives, we’re big on option selling, but to do portfolio optimization you are using all these combinations of derivatives. For example, with stocks, you can perform a Monte Carlo simulation with 30 stocks and find your optimal portfolio pretty quickly, within seconds if not instantaneously. But with derivatives, you need to do trillions of combinations. Very quickly, it becomes pretty burdensome on your computer and takes a long time to calculate.”
He added that those traditional Monte Carlo simulations – or, simulating random scenarios to better predict outcomes – proved inefficient for their complex derivative portfolios, often taking close to eight hours to run.
From Traditional to Quantum Computing
The Shaw Circle team was particularly interested when SC Quantum introduced them to the potential of quantum computing, which major financial firms around the world are exploring to solve their own technological roadblocks. Despite having no prior experience in the field, Fowler and Burns embraced the challenge, leveraging their strong backgrounds in finance and computer science. This partnership opened doors to cutting-edge resources and expertise, enabling them to explore new frontiers in financial optimization.
Although they admit that quantum is in its early days, the team is encouraged by the potential of the technology in use cases beyond the world of finance – and they are glad SC Quantum is helping connect quantum with local entrepreneurs and scientists across fields and disciplines.
“I will say it is extremely exciting,” said Burns. “There is a lot of interesting work in smart Manufacturing, which is really encouraging. We’ve had a few healthcare contacts that are also encouraging. I personally am interested in that space, because I have a pacemaker. I was diagnosed with a pretty severe heart condition at 13 years old. So I’ve always been very into health technology. And I’m extremely encouraged by the abilities of technology to help out in that space.”*
Quantum Leap: From Hackathons to Hedge Fund
Encouraged by faculty members and the SC Quantum team, the hedge fund team’s journey took them to MIT’s annual hackathon, where they competed in quantum computing challenges. Despite being newcomers to the quantum realm, Fowler and Burns’ expertise in finance and problem-solving helped them not just compete, but they finished among the competition’s leaders.
They tackled a portfolio optimization problem using a Quantum Markov Chain Monte Carlo (QMCMC) approach to enhance the efficiency and accuracy of their models.
According to Fowler and Burns, the hackathon experience not only validated their approach but also solidified their belief in the potential of quantum computing in finance.
SC Quantum’s Role in Their Success
SC Quantum has been instrumental in the startup’s success, the team said.
From providing initial funding and support to facilitating connections with industry leaders and academic institutions, SC Quantum has played a pivotal role in their journey.
SC Quantum has also been behind the naming of Fowler and Burns as the program’s first quantum fellows, which is an added incentive to keep the team – and their business – in South Carolina.
“SC Quantum has been everything for us, from the very beginning all the way through after graduating until we’ve launched the business. And even then, we’ll partner with them for our pipeline of new quantum engineers,” said Fowler.
Joe Queenan, Executive Director of SC Quantum, said that the entrepreneurs behind Shaw Circle have inspired the SC Quantum team.
“The Shaw Circle entrepreneurs are inspiring,” said Queenan. “They have the wisdom of seasoned executives and a generous spirit beyond their years. Their inquisitive nature and leadership style is what sets them apart, though. They could set up shop anywhere but understand what we are trying to build with SC Quantum and by building their business here, they are standing shoulder-to-shoulder with us in making our city and state a destination.”
Looking Ahead: A New Era in Financial Optimization
With plans to launch their first institutional hedge fund in January 2025, Fowler and Burns are set to raise around $50 million. Their fund, which will be based in Charleston, South Carolina, aims to harness the power of quantum computing as one tool to capture volatility and optimize portfolios.
Advice for Aspiring Quantum Enthusiasts
For those looking to enter the quantum space, Burns advises focusing on solving hard problems and leveraging one’s passion. He emphasizes the importance of a strong foundation in mathematics and computer science, along with a willingness to learn and connect with experts in the field.
“Don’t just think of it as quantum,” Burns advises. “Go solve hard problems. A lot of times, it can lead you to quantum.”
Fowler echoes this sentiment, highlighting the significance of networking and continuous learning. “The amount of resources are endless and limitless out there already. You just have to reach out to people that you think might know more than you or you might be interested in working with or working for.”
