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Seoul-based fintech company Qraft Technologies, which uses artificial intelligence (AI) to create and manage exchange-traded funds (ETFs), announced on Tuesday to have closed a funding round worth $9 million.
Veteran South Korea-based venture capital (VC) Smilegate Investments led the round, with Korea Development Bank participating.
The fresh funds will help the company set up a Hong Kong office and grow its team by roughly 50 per cent. The investment will also allow the platform to better market their stock market products, elevating AI-based ETFs as their main business driver.
Qraft Technologies has four AI-driven ETFs on the New York Stock Exchange (NYSE: QRFT, AMOM, HDIV and NVQ). QRFT and AMOM have outperformed the S&P500 since inception. All ETFs are managed by AI that analyzes the market with deep learning and picks what it finds to be the best stocks to include every month.
“One of the reasons we placed our bets with Qraft Technologies is that they really go out of their way to prove the validity of their AI,” said Heungsun Jang, director of lead investor, Smilegate Investments. “We believe Qraft is well-positioned to lead the paradigm shift as AI becomes more and more prevalent in the stock market.”
Qraft also operates an AI-powered order execution system capable of outperforming the market’s volume-weighted average price by more than two basis points. This order execution system is used by 80 per cent of Korea’s banks.
“We aim to prove to the world that AI can surpass human capabilities in the investment industry,” added Marcus Kim, chief executive officer, Qraft Technologies. “Everyone around the globe can see for themselves the strong daily performance of our ETFs. While humans are still better than AI at predicting long-term structure changes, we believe that AI will most likely replace humans for short-term trading and execution.”
The company has 20 profile partnerships to date, including Mirae Asset and Samsung, along with top Korean banks and universities. They are now expanding globally with a strong focus on building up their NYSE-listed AI ETF portfolio, recently hiring ex-Vanguard executive director Geeseok Oh to head their new APAC office.
This most recent investment brings the company’s fundraising total to over $18 million and company valuation to roughly $150 million.