A Sydney roboadvice fintech has shunned institutional investors in favour of tapping its own retail customer base for a $2.4 million capital raising round.
Simply Wall St provides online data and analysis for retail share market investors on subscription plans that are relatively cheap (free, $174 per year, $480 per year) compared to hiring a human investment advisor. The startup covers the ASX, NYSE, NASDAQ, Canada’s TSX and TSXV, Britain’s LSE and AIM, and the NZSE.
“We were planning to do a classic VC round, but after announcing the fundraise we were absolutely overwhelmed with the interest from our users,” said Simply Wall St founder and chief Al Bentley.
“The demand was much stronger than what we could accommodate. It is amazing to have such a supportive user base and we are very grateful to them.”
The company claims to have quadrupled its user base in the past 12 months, to now boast 100,000 retail investors on its platform.
While startups like Robinhood in the US and Stake in Australia are starting to offer everyday folk the ability to trade stocks for little or no brokerage fees, Bentley said they lack an advisory component that help investors make good choices.
“The whole investment industry is moving away from managed and advised services. Both high fees and a lack of trust play a significant role here,” he said, adding that multiple studies have found retail investors end up with underperforming portfolios.
Bentley said that, while seeking capital, some institutions asked why Simply Wall St didn’t charge a higher fee or concentrate more on high net worth clients.
“That’s what’s wrong with the system,” he said.
“There is a lot of people today in the market who are not getting the advice they need, because they are not interesting enough to the traditional finance services. The sad thing is that these are usually the most vulnerable people — young, beginning and small investors.”
Simply Wall St, established in 2014, uses data from Standard and Poor’s Capital IQ, with the analysis algorithm open sourced for complete transparency. The startup says the majority of its users and revenue now come from the USA.