I assume their business model is roughly : to implement algorithms that find near-arbitrage opportunities by sifting through vast amounts of market data, then use those to multiply investment funds. This sounds like the perfect domain for a startup.. where a nimble small team of quant/developers would have huge advantages, by being faster to rollout.

This is almost a pure software business, so why aren't these companies more like startups? Is it because of the expense of getting fine grained and low latency market data [eg. exchange colocation]? Or is it due to the contacts needed in the biz to get the 'investment' funds to trade with? Or is it because only large financial entities have access to these risky speculative trades?

Side note : I see Jane Street Capital use Ocaml, and some other quants use KDB/Q for implementing these kinds of algorithms, so it seems innovative languages give leverage here. I was thinking Node.js + a js BTree api to access streaming data would be a nice dev environment.