In the Gulf region, family offices are grappling with a unique challenge. Despite having ample capital, they often lack control over critical financial channels. Historically, regional liquidity has been channeled into Wall Street and cryptocurrency markets through external asset managers, leaving local institutions as passive participants.
Lucid Capital, a quantitative trading firm based in the UAE, is set to change this dynamic. The firm has raised $2.5 million in a seed round led by Tharawat Holding and Singular Link. More significantly, it has secured $200 million in institutional commitments targeting US equities and crypto markets, leveraging its proprietary infrastructure.
The firm’s mission is to enable MENA region capital to take a more active role in global markets. Co-founder and CEO San Shi emphasizes the need for local capital to have control and advanced tools to compete effectively.
Lucid’s journey began as a quantitative research project in the US before relocating to the UAE, aligning with Gulf nations’ efforts to transform into fintech hubs. The founders noted a technological gap where regional family offices lag behind global hedge funds in terms of execution and algorithmic trading capabilities.
Lucid aims to bridge this gap with autonomous trading agents that adapt in real-time to market conditions, unlike traditional static algorithms. Their system adjusts trade velocity, sources liquidity discreetly, and assesses risk in real-time, offering a sophisticated trading approach.
The $2.5 million raised will cover operational costs, while the $200 million commitment will fuel trading activities. This structure allows Lucid to maintain a clean capitalization while focusing on performance fees.
The firm faces stiff competition from established giants like Citadel Securities and Two Sigma in US equities and from market makers like Wintermute in cryptocurrencies. However, Lucid plans to leverage local insights and regulatory compliance to carve out a niche.
Challenges remain, including clarifying licensing status and proving the efficacy of their algorithms in real-world scenarios. Co-founder Shi acknowledges the importance of demonstrating tangible results to maintain investor confidence.
If successful, Lucid could mark a significant shift in the Gulf’s investment strategy, moving from passive to active capital allocation.
