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Zero commission investing: UK’s angel Matt Robinson participates in £5M funding round of Robinhood rival

Gotrade, an app that enables anyone in the world to invest commission-free in fractional US stocks, has secured $7 million (approx £5 million) in a seed round led by LocalGlobe. 

Other investors including US VC Social Leverage, Germany’s Picus Capital, and Raptor Group, and angel investors associated with Skyscanner (Carlos Gonzalez-Cadenas), Deutsche Bank (Frank Strauss), and Rapyd (Joel Yarbrough), also participated. Notably, the UK angel Matt Robinson from GoCardless was also a part of this round. 

The seed funding will be used to scale up the business and further product development including a strong focus on user education.

What is Gotrade?

Founded by David Grant, Norman Wanto, and Rohit Mulani in 2019, Gotrade removes the restrictive geographical barriers, commission fees, and minimum deposit sizes to allow anyone to buy and sell fractional US shares. The company competes directly with Robinhood, a stock brokerage that allows customers to buy and sell stocks, options, ETFs, and cryptocurrencies with zero commission.

With Gotrade, users from 150 countries can buy part of a single share in global giants like Amazon, Apple, Google, Tesla, and more on the Dow Jones, S&P 500, and NASDAQ, from as little as $1. 

What do you need to know about Gotrade?

As per the company’s claims, the app is designed in such a way to make trading engaging and easy with menus and screens built to appeal to millennials. 

Notably, the company only works with fully-funded cash accounts without any margin facility. There are no options trading, short selling, or penny stocks, and day trading restrictions apply. 

Further, the Gotrade user can make a maximum of three-day trades every five trading days for accounts under $25K.

Security and protection

Gotrade’s model uses Securities Investor Protection Corporation (SIPC) to protects users’ accounts for up to $500K – to users globally. All money flows through counterparties regulated in Singapore (Rapyd) and the United States (Alpaca & First Republic Bank). 

How Gotrade works?

Gotrade works as a broker to a Financial Industry Regulatory Authority-regulated (FINRA) US intermediary (Alpaca Securities LLC) through which app users can buy shares in some of the US’s biggest companies. 

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.

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. 

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. 

Gotrade revenue model and growth numbers

As of now, Gotrade earns money through a small fee on the foreign exchange from users’ deposits and the interest income generated from cash. The company is planning to launch a premium paid subscription program and interchange fees on users’ debit card spend. 

Gotrade launched by invitation only has seen a 20% week-on-week growth since March 2021. Over 100,000 users have signed up in the 11 weeks since launch, introduced to Gotrade by word-of-mouth and customer referrals. 

Founder’s and investors comments

“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 to 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.

The post Zero commission investing: UK’s angel Matt Robinson participates in £5M funding round of Robinhood rival appeared first on UKTN (UK Tech News).

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