Gotrade, an app that allows international users to buy fractional US stocks and ETFs, today announced 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 returning 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, after receiving clearance from Malaysia’s Labuan Financial Service Authority, and says that it now has 500,000 users from over 140 countries, acquired through word of mouth and customer referrals without marketing. It has processed around $400 million so far, out of 5 million transactions.
The startup was founded in 2019 by Rohit Mulani, Norman Wanto and David Grant. Its app allows users to buy fractional stocks traded on the NYSE and NASDAQ starting at $1. Gotrade does not charge any commission on its trades. Instead, it monetizes by charging exchange fees of 0.5% to 1.2% if users deposit local currency funds which are converted to US dollars for exchanges.
Fees include instant deposits, which means Gotrade users can start trading without having to pre-fund their accounts. Gotrade is also testing a new membership tier called Gotrade Black with premium features such as candlestick charts, analyst ratings, price targets and risk measurement for $2 per month.
Part 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 Southeast Asian markets. This means launching the Gotrade app in local languages with the most commonly used cash deposit methods, including local bank transfers and e-wallets.
Indonesia is one of Gotrade’s main markets, where Gotrade launched Gotrade Indonesia.
Gotrade is among 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 differentiates itself from investment apps that have a split trading feature, like Pluang, or are planning to add one, Mulani said that Gotrade Indonesia’s particular focus on trading split allows it to fuel notional value trading of stocks with high stock prices, like Tesla. , due to its 9-decimal fractional sharing characteristics.
“At the moment, other investment apps (like Pluang) have 1 decimal in terms of fraction. This means it still costs a minimum of $333 and $285 to invest in Amazon or Google respectively on these platforms It costs at least $1 on Gotrade Indonesia,” Mulani said.
He added that another difference is that “unlike other investment apps that offer CFDs (contracts for differences), our products are fully backed by listed stocks.” Since Indonesian brokers are not allowed to offer foreign securities in Indonesia, but must instead offer derivatives of foreign securities, Gotrade has partnered with Valbury Asia Futures, the Jakarta Futures Exchange the Futures Clearing House of Indonesia, which are all supervised by Bappebti, the country. derivatives regulator, to launch Gotrade Indonesia.
This allows Gotrade Indonesia to offer a fully collateralized derivative to give its users access to the US equity market. Funds are sent to the Futures Clearing House and trades are made through Indonesian financial conglomerate Valbury Group and registered on the Jakarta Futures Exchange. Then trades are sent to Alpaca Securities LLC, a FINRA-licensed broker in the United States and executed at the National Best Bid and Offer to comply with US Securities Exchange Commission regulations.
This means that when the user trades on Gotrade Indonesia, it results in a contract between him and Valbury. Valbury’s corresponding transaction with Alpaca Securities creates a fully hedged position.
Gotrade Indonesia claims to be the first platform in Indonesia to offer this type of market access for US stocks, which means its users do not have to go through a foreign broker or trade CFDs locally while accumulating substantial costs.
Along with the launch of Gotrade Indonesia, the company announced that it had added Andrew Haryono as a co-founder. Haryono is the owner of the Valbury Group.