From low-commission stock brokers likeFreetradeto robo-advisers likeNutmegand ethical investment apps likeClim8, the 'investment' category of fintechs appears reasonably saturated.
But clearly, entrepreneurs think otherwise, as last year two high-profile new investment fintechs launched – Lightyear and InvestEngine.
While Lightyear aimed to take onFreetradedirectly by undercutting its larger rival, InvestEngine is taking a different approach entirely.
Meet InvestEngine
According to co-founders Simon Crookall and Andrey Dobrynin, the thesis of InvestEngine is that no one else is providing long-term investors with the kind of platform and tools they need.
“Other platforms promote, in our opinion, short-term speculative behaviour,” Dobrynin, the fintech’s managing director, told ETF Stream's sister publication AltFi. “They push the trending stocks. What is hot with other investors while that really should not matter for the long-term investor.”
For the clientele Crookall (pictured) and Dobrynin are after, what is critical is a platform with low or no fees, insights on the weight of their portfolio across geographies, sectors and asset classes and the ability to rebalance their holdings in a few clicks as circumstances change.
InvestEngine’s pitch is that they do exactly that while charging no fees for trading ETFs or setting up an ISA. Instead, they offer premium-managed portfolios and additional features and insights that appeal to long-term investors.
And so far, it seems to be working. Since launching last July, InvestEngine has seen tremendous growth, winning over 10,500 customers with its proposition, gaining over £70m assets under management (AUM), and in April, raising £1.5m as part of its first crowdfunding campaign.
“We were slightly caught [off guard], especially during the end of the tax year, by the volumes of business,” Crookall said.
A year of growth
Crookall, a serial entrepreneur and the founder of Gumtree, explained the journey toward building InvestEngine was not without its challenges and false starts.
“We started with a robo product – the same business that you see in aNutmeg,Wealthifyor Moneyfarm – and quickly realised that to make it a viable business, we would have to solve the high cost of acquisition problem, which is why we developed our own free DIY platform so people could onboard and try out investing.”
That DIY platform eventually became the core of the business and grew to offer over 500 ETFs with more being added daily.
While the platform might sound appealing to day traders on paper, InvestEngine believes its decision to execute orders daily will keep its customer base in check.
“We are really trying to encourage people to think long-term about their financial health,” Crookall added.
A roadmap to profitability?
Next on the duo’s roadmap are plans to both expand InvestEngine’s offering and increase revenue on the path toward profitability.
“We definitely have plans to move into the single-stock universe,” Crookall continued. “And part of the roadmap is also to have what we would describe as an expert portfolio.”
InvestEngine’s expert portfolios will sit alongside the fintech’s two managed portfolios – that charge an annual fee of 0.25% – and will give investors the ability to track an expert investor.
“Maybe it is, for example, Warren Buffett's Berkshire Hathaway,” Crookall said. “Periodically, we will look at his portfolio and replicate it so that, for a free, you could follow that approach.”
The feature is obviously still in development, but the duo believe their customers will be willing to pay “the small fee that we'll be asking for, for the automation that we'll be providing.”
Also on the roadmap, given the success of their recent crowdfunding campaign, is a likely return toCrowdcube.
“We will be looking to perhaps revisit the crowd, at some point in the not too distant future,” Crookall said, implying that InvestEngine is not unaware of the success thatFreetradeexperienced acrossits seven Crowdcube rounds.
“We have seen that similar businesses have used this avenue very successfully,” he said. “It is no secret that a typical crowdfunding investor might also be the ideal customer for the type of trading platform that we are trying to develop.”
This story was originally published onAltFi
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