Synopsis
Instacart cofounder Apoorva Mehta launched Abundance, a hedge fund utilising thousands of AI agents to independently manage trades, research, and stock selection. This innovative approach aims to replace human portfolio managers entirely, with some strategies already operating solely on AI. Mehta believes AI's ability to process vast information and make decisions surpasses human limitations.Listen to this article in summarized format
Thousands of bots scour the internet for trade ideas, conduct in-depth research, pick stocks to wager on and against, size bets and even execute trades. The 39-year-old entrepreneur started the firm, Abundance, last year with a small crew of quantitative researchers, engineers and AI experts who build and sustain AI models.
While many hedge funds incorporate AI to support human traders, Palo Alto, California-based Abundance ultimately aims to have artificial intelligence run the entire fund. The firm already already has stock-picking strategies run solely by AI, but some strategies in the works will have a degree of human involvement for now, Mehta said in an interview.
Still, human investors are more limited than AI, he said.
People “can only track so many opportunities at once, process them only so deeply, make only so many high-quality decisions,” Mehta said. “Even for the exceptional investor, the process is locked inside their mind. AI changes that entirely.”
Hedge funds have relied on automatization to some degree for decades, with quant firms like D.E. Shaw & Co. seeking to eliminate human whims from the trading process. But generative AI is dramatically shifting the work flow of a slew of industries, especially finance, and sparking commentary about whether the technology can improve on human judgment.
Late last year, Citadel founder Ken Griffin argued that generative AI isn’t helping hedge funds beat the market and isn’t meaningfully affecting the industry yet. While Mehta said that Abundance’s returns have outperformed multiple indexes, he declined to specify which benchmarks his firm surpassed.
Abundance’s 10-person team mostly trades its own capital right now but plans to take outside money at some point. The firm, which raised $100 million in seed equity financing, makes long and short stock bets and intends to expand into other asset classes.
Mehta was inspired to start the fund after OpenAI released its o3 model, which demonstrated a more advanced ability to reason through complex tasks. His team had a hunch that generative AI could be used to “make more and more consequential decisions, even capital allocation decisions,” he said.
He co-founded Instacart in 2012 and exited about a decade later following the grocery-delivery firm’s initial public offering. Mehta previously worked as an engineer at Amazon.com, according to his LinkedIn profile. As of June 30, Mehta still owned more than 8% of Instacart, according to a filing.
