Gotrade raises $7m to make trading in US stocks and shares fun, safe, easy and affordable
Gotrade is a fractional shares trading platform, backed by LocalGlobe, Y Combinator and current and former senior executives of Rapyd, Raisin, GoCardless, Skyscanner and Paypal.
• Gotrade removes the restrictive geographical barriers, commission fees and minimum deposit sizes to allow anyone to buy and sell fractional US shares
• users from 150 countries can buy part of a single share in global giants like Amazon, Apple, Google, Tesla and more, from as little as $1
• by making trading fun, accessible and safe, Gotrade has seen users of its invite-only app increase by 20% week-on-week
• the funding round was 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 – the viral trading app on a mission to level the playing field and make investing open to everyone, everywhere – has raised $7 million in a Seed round led by LocalGlobe. The round also saw participation from US VC investor Social Leverage, Germany’s Picus Capital and Raptor Group as well as angel investors* associated with GoCardless, Skyscanner, Morgan Stanley, Deutsche Bank and Rapyd.
The funding was revealed just weeks after Gotrade launched by invitation only, resulting in 20% week-on-week growth. Over 100,000 users have signed up in the 13 weeks since launch, introduced to Gotrade by word-of-mouth and customer referrals.
Bringing global access to the world’s biggest companies
Gotrade was founded in 2019 by David Grant, Norman Wanto, and Rohit Mulani to remove the barriers and substantial costs involved with investing in US stocks. Historically, people who wanted to buy shares in the likes of Apple, Google, Disney and other major US companies would have had to have been based in the US – with a valid social security number – or had to pay stockbrokers a high commission. What’s more, the high cost of a single share in some of the US’s most popular companies makes buying the shares prohibitive for those who want to invest from regular income, as opposed to the result of a one-off windfall, gift or inheritance. A single share in Amazon, for instance, trades at around $3,2201; while Berkshire Hathaway’s shares trade at around $422,0001.
Gotrade offers savers from anywhere in the world access to ownership of these US companies by removing geographical boundaries for investing, by charging no commission and by removing minimum deposit sizes. Users from 150 countries can buy fractional shares in global giants on the Dow Jones, S&P 500 and NASDAQ from as little as $1. For instance, if Facebook is trading at $100/share, Gotraders can buy 1/100th of a Facebook share with $1.
The app is specifically designed to make trading engaging and easy with menus and screens built to appeal to millennials and digitally discerning customers of all ages; step-by-step tutorials, and help guides.
To increase the safety of users, Gotrade only works with fully funded cash accounts without any margin facility. There are no options trading, short selling or penny stocks – as seen on similar competitors – and day trading restrictions apply. A Gotrade user can make a maximum of three day trades every five trading days for accounts under $25,000.
Gotrade’s model extends the protection offered by the Securities Investor Protection Corporation (SIPC) (http://sipc.org/) – which protects users accounts for up to $500,000 – to users globally. And all money flows through counterparties regulated in Singapore (Rapyd) and the United States (Alpaca & First Republic Bank).
How Gotrade democratises investment on a global scale
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. A Gotrade user can decide how many fractions to buy, or can set their budget and the app will automatically calculate the number of fractional shares they can afford through notional value trading. For instance, a user could buy $5 (0.01028807 shares1) of Netflix or $5,000 (10.2880658 shares1) of Netflix without having to do the calculation themselves.
The transaction takes place seamlessly and in real time, although the trades execute only when the US market is open.
Users can search for specific stocks, or browse through categories from Tech Giants to Sport, Women in Charge, Gaming, and COVID-19-related listed companies. Once they click on a listing, a chart shows that particular stock’s recent price movement, as well as its market cap, dividend yield and more. Recent news flow from the company is also displayed. Clicking on any of these terms reveals a pop-up which explains the meaning of the term. From this page, users can buy or sell.
All fractional shares are shown on a user’s Portfolio page, where they can track performance, add companies to a Wish List, and sell shares they no longer wish to hold. When dividends on a share are paid, they go into the user’s account.
Viral growth
The accessible nature of Gotrade has seen the invite-only app spread across 145 of Gotrade’s 150 countries through word of mouth, virality and strong network effects. Since their launch in March 2021, the number of accounts grew 20% week-on-week and have hit one hundred thousand. The demographic is largely millennials who use Gotrade to buy and hold investments, not to day-trade.
“The US market is one of the greatest generators of wealth in history but access to it outside the United States remains out of reach for the vast majority of the world due to numerous barriers to entry,” said Gotrade founder Rohit Mulani. “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.”
“Over the past 100 years, US stocks have delivered average annual returns of 10%. 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,” Remus Brett, LocalGlobe, said.
“Investing in the stock market should not be reserved for the uber-wealthy. Savvy Millennials and Gen Z savers understand the digital world more than anyone and they are frustrated that it is currently very difficult to invest in some of the world’s fastest growing companies. Gotrade opens up Wall Street to people wherever they live in the world, giving them the possibility of owning shares, however few, in some of the companies that are destined to be 21st century giants,” Matt Robinson, co-founder at GoCardless and CEO and co-founder at Nested.
“As early investors in EToro and Robinhood we are very excited to be investors in Gotrade. 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. Flash forward and now Gotrade customers can buy shares and fractional shares in their favorite American companies,” said Howard Lindzon, founder at Stocktwits and general partner at Social Leverage.
Instead of charging commission fees, Gotrade collects a small fee on the currency exchange from deposits, and any interest income generated from cash. The app will always be free, but will be looking to add a premium paid subscription program in the future. The Seed funding will be used to scale up the business and further product development including a strong focus on user education.