October 19, 1998
SciComp licenses software to Dutch bank
Marla Dial Austin Business Journal
An Austin company that makes "software that
writes software" has inked a licensing agreement
with a far-flung European bank.
SciComp Inc., a 4-year-old startup, is releasing its
first product: SciFinance, a tool that takes the
programming work out of pricing a complicated type of
investment called derivative securities. A large Dutch
bank, MeesPierson, has licensed the product for use in
its Amsterdam headquarters.
Financial terms of the deal were not disclosed.
Derivatives are a type of security investment based on
the value of other underlying securities. Bank employees
can spend days or weeks writing software code for highly
complex derivative pricing models, but SciFinance is
designed to do the same work up to 10 times faster.
MeesPierson employs about 4,000 people and operates in
25 countries. The bank serves a range of business
clients: entrepreneurs, managers and treasurers of
mid-size and large international organizations that trade
in commodities markets.
"They're a pretty sophisticated user of
derivatives," SciComp founder and President Elaine
"We can learn a lot by working with them,"
adds Curt Randall, vice president of technology
applications. "We expect good enhancements to the
software through working with them."
SciComp's technology is designed to help customers
produce their own complex, mathematical software, without
manual computer programming.
SciFinance "is software that writes
software," Kant says. "Using our system, they
develop specific kinds of software that they can
distribute throughout the company."
Although SciComp has a few other customers,
MeesPierson is the first bank to announce its
relationship with the company publicly. Kant says other
banks -- including several large investment organizations
that tested SciComp during an 18-month period -- don't
want their names disclosed, for competitive reasons.
The MeesPierson licensing is another milestone for
SciComp, which recently secured $1.5 million in
first-round venture funding from a New Jersey firm,
Verticality Investment Group LLC, to bring its product to
The startup previously received $2 million from the
U.S. Department of Commerce Advanced Technology Program,
says Kant, who holds a math degree from the Massachusetts
Institute of Technology and a doctorate in computer
science from Stanford University.
Kant, whose interests in using computers to automate
mathematical processes led her to start the company,
didn't originally plan to target the financial industry.
But Randall -- a physicist Kant met while both were
working for Schlumberger -- had several contacts on Wall
Street, where scientists in the early 1990s were
providing derivative pricing models to help traders
predict stock market movements.
Randall saw an opportunity for SciComp to apply
technology in the same way.
Kant says SciFinance is one of three ways banks can do
derivatives pricing. The others are employing someone to
write pricing code by hand or buy "library
packages" that price only certain kinds of
SciFinance, however, creates a language that can
address a variety of derivative scenarios.
"Because it's software that writes other
software, the banks can use that to price deals we've
never even thought about before," Randall says.
The basic licensing fee for SciFinance is $100,000 per
user per year.
Here's how the software works: a quantitative analyst
tells the computer about a particular finance problem in
about half a page of text -- including specifications,
equations, boundary conditions and final values for the
SciFinance uses that explanation to generate thousands
of lines of code and spits out a model for solving the
Stathis Tompaidis, assistant director of the Center
for Computational Science at the University of Texas, is
using SciFinance in his own research and graduate
"Without necessarily knowing how to program
themselves, [students] are able to develop software that
can price complex instruments," Tompaidis says.
For banks -- which often write their own, proprietary
software for new pricing instruments -- SciFinance can
slash the development cycle by one-third to one-half, he
Randall says banks that use the product can examine
its code themselves to understand the pricing models it
yields. That means they don't have to rely on a
mysterious mechanism when huge amounts of money are at
What's more, SciFinance can be used to help banks
assess and hedge the risks they incur after selling
(c) 1998, Austin Business Journal