AlgoX2 raises $3.5M to modernize data streaming infrastructure

AlgoX2, a distributed data streaming infrastructure platform building a solution for throughput-critical applications, today announced it has raised $3.5 million in seed funding.

The round was led by Bessemer Venture Partners and included angel investors from major technology companies.

Data infrastructure continues to evolve from traditional on-premises warehouses to cloud-based lakehouses capable of distributing information globally in real time. Lakehouses bring together flexible, low-cost storage and structured management for high-performance analytics, enabling organizations to share and act on data across a unified platform.

This shift supports a wide range of data-intensive industries including real-time analytics, business intelligence and, most recently, generative artificial intelligence, which demands high-throughput access to massive datasets.

AlgoX2 was founded by Chief Executive Alexei Lebedev, Chief Technology Officer Vladimir Parizhsky and Chief Business Officer George Levin with a vision to change radically how enterprise systems handle data streaming.

Lebedev, formerly chief software architect at the New York Stock Exchange, and Parizhsky previously co-founded Algo Technologies, which commercialized high-frequency trading technology. Their team rebuilt the NYSE’s trading engine to achieve a roundtrip latency of just 16 microseconds — compared with Nasdaq OMX’s INET at 250 microseconds, which was touted as the second-fastest platform at the time.

In an interview with SiliconANGLE, Levin said the team recognized an industry bottleneck: Modern applications such as high-frequency trading, IoT, AI assistants, and media recommendation systems need a solution that can scale easily while maintaining extremely high throughput.

“Overall data is shifting to real time,” Levin said. “Lakehouses are becoming the main destination for data and to connect all the pieces. Usually, streaming is done by Kafka. Kafka was built for yesterday’s scale. It’s very hard to maintain and expensive to build.”

Since its launch in 2010, Apache Kafka has been the go-to solution for large-scale data distribution, providing high-throughput and fault-tolerant streaming. It’s often described as the “central nervous system” for data, organizing continuous streams of events into topics for producers and consumers to share.

AlgoX2’s proprietary platform introduces a Kafka-compatible system that delivers up to 10 times the throughput on the same hardware, 100 times the speed, and 10 times lower total cost of ownership. Because it’s fully API-compatible with Kafka, organizations can replace existing brokers without changing a line of code. It also supports multiple protocols, including MQTT and Redis, avoiding vendor lock-in while taking advantage of modern hardware and networking advances.

Lebedev explained that a streaming platform shouldn’t require endless tuning or in-house experts just to reach basic performance. “A streaming platform should work like a distributed file system,” he said. “You plug it in, it streams your data and saves it for later.”

The founders see particular demand from sectors that rely on real-time insights. “Banks, advertisers and large media companies — companies where a lot of events are happening and they need to be processed,” Levin said.

Parizhsky added that while low latency matters for some cases such as trading or targeted advertising, scalability and cost are often the bigger draw. “Latency isn’t something everyone needs,” Levin said.

Janelle Teng, a partner at Bessemer Venture Partners, said the firm was drawn to AlgoX2’s approach to infrastructure innovation. “In sectors like AI and finance, where speed is critical, AlgoX2 arms organizations with a purpose-built streaming backbone, helping them move fast, scale with confidence and deliver dependable performance for tomorrow’s data-driven world,” she said.

In the short term, AlgoX2 plans to complete proof-of-concept projects with several Fortune 500 design partners before opening its platform to a wider market. With the funding, the company intends to expand its sales and marketing teams after validating these deployments.

“We’re building something unique,” Levin said. “It’s something that never existed before, and something that’s pretty much impossible to copy. So that what my favorite part in this business.”

Image: Shutterstock/Blue Planet Studio