Gotrade, a trading app, has raised $7 million in a seed funding round led by LocalGlobe with participation from Social Leverage, Y Combinator, Picus Capital, and Raptor Group as well as angels associated with GoCardless (Matt Robinson), Skyscanner (Carlos Gonzalez-Cadenas), Deutsche Bank (Frank Strauss), and Rapyd (Joel Yarbrough). Gotrade highlighted the list of strategic investors that are queued up to aid in the Fintech’s growth.
Gotrade wants to challenge the likes of Robinhood but on a global basis which remains a largely domestic phenomenon.
Gotrade is a fractional shares trading platform that enables users from 150 different countries to purchase equities in companies like Apple, Google, Tesla and more.
Gotrade reports that over 100,000 users have signed up to use the app in the 11 weeks since launch. Promotion has largely been on a word of mouth basis as it was launched as an invitation-only platform.
Gotrade was founded in 2019 by David Grant, Norman Wanto, and Rohit Mulani to reduce the cost and friction affiliated with purchasing publicly traded shares. Noting that some listed firms have a per-share price that makes investing out of the reach of some people, Gotrade has focused on offering fractional shares – an increasingly popular feature.
Gotrade is a commission-free trading platform without a minimum deposit size. The app seeks to engage a younger generation of investors with simple to understand features as well as helpful guides. Instead of charging a commission, Gotrade collects a fee on the currency exchange from deposits, and any interest income generated from cash. In the future, Gotrade expects to add a premium paid subscription program.
Of note, is the fact that Gotrade does NOT offer margin trading, nor options or short selling. Day trading restrictions are part of the platform as investors may make a maximum of three trades every 5 trading days (for accounts under $25,000).
Gotrade extends the protection offered by the Securities Investor Protection Corporation (SIPC) which protects users’ accounts for up to $500,000 – to users globally. Funds are channeled through counterparties regulated in Singapore (Rapyd) and the United States (Alpaca & First Republic Bank).
Gotrade works as an introducing broker to a Financial Industry Regulatory Authority-regulated (FINRA) US intermediary (Alpaca Securities LLC) through which app users can buy parts of shares in some of the US’s biggest companies. Through this broker, stock inventory is split into millions of fractions.
“We’ve eliminated those barriers with fractional shares, no commissions, custody, inactivity or dividend fees and an intuitive user experience. Our mission is to make investing accessible for literally anyone – be that a first time investor who needs a helping hand understanding jargon or a seasoned investor who has many years of experience under their belt.”
Remus Brett from LocalGlobe, noted that US stocks have generated an average annual rate of return of 10% for the past 100 years:
“With compounding, an investment of $1k back then would be worth $13m today. These returns have fuelled wealth creation in the US and other developed markets but most of the world has missed out. We believe Gotrade has the potential to help the world’s 99% gain access the same benefits that the 1% have. We are incredibly excited to be joining Rohit, David and Norman on this journey.”
Matt Robinson, co-founder at GoCardless and CEO and co-founder at Nestedm, said that investing in the stock market should not be reserved for the “uber-wealthy.”
Howard Lindzon, founder at Stocktwits and general partner at Social Leverage, drew a parallel to both Robinhood and EToro – two companies he backed in their early days:
“We met Rohit in San Francisco a few years back and we hit it off and agreed that investors around the world would want what Robinhood users wanted.”