Gotrade, an app that allows international users to buy fractional US stocks and ETFs, announced today 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 returning investors LocalGlobe, Social Leverage and Raptor.
The company’s most recent funding round was $7 million, announced in June 2021. Launched a year ago after receiving approval from the Labuan Financial Service Authority of Malaysia, Gotrade’s app says it now has 500,000 users from more than 140 countries, acquired through word of mouth and client recommendations without marketing . It has processed about $400 million on 5 million trades so far.
The startup was founded in 2019 by Rohit Mulani, Norman Wanto and David Grant. Its app allows users to buy fractional shares of stocks traded on the NYSE and NASDAQ from as little as $1. Gotrade does not charge commission on its trades. Instead, it monetizes by charging a 0.5% to 1.2% foreign exchange fee when users deposit local currency funds, which are converted to US dollars for trading.
The fee includes instant deposits, meaning 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 like candlestick charts, analyst ratings, price targets and risk measurement for $2 per month.
A portion 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. This means Gotrade’s app launches in local languages with the most commonly used cash deposit methods including local bank transfers and e-wallets.
One of Gotrade’s key markets is Indonesia, where Gotrade launched Gotrade Indonesia.
Gotrade is among several investment apps in Indonesia that have raised funds in the last year or so. These include Pluang, Pintu, Bibit and Ajaib.
When asked how Gotrade Indonesia differs from investment apps that have a fractional trading feature, like Pluang, or plans to add one, Mulani said that Gotrade Indonesia’s specific focus on fractional trading allows it to trade by par shares to push ahead with high stock prices like Tesla, due to its 9 decimal place fractional function.
“Right now other investing apps (like Pluang) have 1 decimal place when it comes to fractional numbers. That means it still costs at least $333 and $285 to invest in Amazon and Google, respectively, on these platforms. It costs at least US$1 at Gotrade Indonesia,” Mulani said.
He added that another difference is that “unlike other investment apps that offer CFDs (Contract for Differences), our products are fully backed by listed shares.” Since Indonesian brokers are not allowed to offer foreign securities within Indonesia but are required to offer derivatives of foreign securities, Gotrade has partnered with Valbury Asia Futures, the Jakarta Futures Exchange, the futures clearing house of Indonesia, all of which are overseen by Bappebti, the country Derivatives regulator to launch Gotrade Indonesia.
This allows Gotrade Indonesia to offer a fully hedged derivative to give its users market access to US stocks. Funds are sent to the futures clearing house and trading is through Indonesian financial conglomerate Valbury Group and is registered on the Jakarta Futures Exchange. Trades are then sent to Alpaca Securities LLC, a FINRA licensed US broker-dealer, and executed at the National Best Bid and Offer to comply with US Securities Exchange Commission regulations.
This means that a contract is formed between the user and Valbury when the user trades on Gotrade Indonesia. Valbury’s corresponding trade with Alpaca Securities creates a fully hedged position.
Gotrade Indonesia says it is the first platform in Indonesia to offer this type of market access for US stocks, meaning its users don’t have to go through a foreign stockbroker or trade CFDs locally while incurring significant fees.
Along with the launch of Gotrade Indonesia, the company announced that it has added Andrew Haryono as a co-founder. Haryono owns the Valbury Group.