Gotrade, an app that allows international users to buy fractional shares of U.S. stocks and ETFs, today announced that it has raised $15.5 million in Series A funding. The round was led by Velocity Capital Fintech Ventures, with participation from Mitsubishi UFJ Financial Group, BeeNext, Kibo Ventures, Picus Capital and recurring investors LocalGlobe, Social Leverage and Raptor.
The company’s latest funding round was $7 million, announced in June 2021. Gotrade’s app was launched a year ago, following approval from Malaysia’s Labuan Financial Service Authority, and says it now has 500,000 users from more than 140 countries. via word word and customer referrals without marketing. It has traded about $400 million to date, spread over 5 million trades.
The startup was founded in 2019 by Rohit Mulani, Norman Wanto and David Grant. The app allows users to buy fractional shares in NYSE and NASDAQ traded stocks starting at $1 USD. Gotrade charges no commission on its transactions. Instead, it makes money by charging 0.5% to 1.2% exchange fees when users deposit money in local currency that is converted into US dollars for trading.
The fee includes direct deposits meaning Gotrade users can start trading without having to fund their accounts in advance. Gotrade is also testing a new membership tier called Gotrade Black with premium features such as candlestick charts, analyst ratings, target pricing and risk measurement for $2 USD per month.
Some of the capital will be used to create localized versions of the app for more markets. Co-founder and CEO Rohit Mulani told TechCrunch that the startup is currently exploring all markets in Southeast Asia. That means launching the Gotrade app in the local languages with the most commonly used cash deposit methods, including local bank transfers and e-wallets.
One of Gotrade’s main markets is Indonesia, where Gotrade has launched Gotrade Indonesia.
Gotrade is one of several investment apps in Indonesia that have raised funds in the past year. These include Pluang, Pintu, Bibit and Ajaib.
When asked how Gotrade Indonesia differs from investment apps that have a fractional trading function, such as Pluang, or plan to add one, Mulani said Gotrade Indonesia’s specific focus on fractional trading allows for notional value trading of stocks with high stock prices, such as Tesla. , because of the fractional division functions with 9 decimal places.
“Right now, other investment apps (like Pluang) have 1 decimal in terms of fractional. This means that it still costs a minimum of $333 and $285 to invest in Amazon or Google on those platforms, respectively. It costs a minimum of $1 on Gotrade Indonesia,” said Mulani.
He added that another difference is that “unlike other investment apps that offer CFDs (contract for differences), our products are fully backed by publicly traded stocks.” Since Indonesian brokers are not allowed to offer foreign securities within Indonesia, but instead have to offer derivatives of foreign securities, Gotrade partnered with Valbury Asia Futures, the Jakarta Futures Exchange, the Futures Clearing House of Indonesia, all of which are overseen by Bappebti, the derivatives regulator, to launch Gotrade Indonesia.
This allows Gotrade Indonesia to offer a fully backed derivative to give its users market access to US equities. Funds are sent to the Futures Clearing House and trades are made through the Indonesian financial conglomerate Valbury Group and registered on the Jakarta Futures Exchange. Then trades are sent to the Alpaca Securities LLC, a FINRA-approved broker-dealer in the US and executed at the National Best Bid and Offer to comply with the regulations of the US Securities Exchange Commission.
This means that when the user trades on Gotrade Indonesia, it results in a contract between them and Valbury. Valbury’s corresponding transaction with Alpaca Securities creates a fully hedged position.
Gotrade Indonesia says it is the first platform in Indonesia to provide this kind of market access for US stocks, meaning the users don’t have to go through a foreign stock broker or trade CFDs locally, while paying significant fees.
Along with the launch of Gotrade Indonesia, the company announced that it has added Andrew Haryono as a co-founder. Haryono is the owner of the Valbury Group.
This post Gotrade, the app that allows international users to buy fractions of US stocks, raises $15.5 million on Series A – TechCrunch was original published at “https://techcrunch.com/2022/04/04/gotrade-the-app-that-lets-international-users-buy-fractions-of-u-s-stocks-raises-15-5m-series-a/”
