Trickle-Up Economics

Roboinvest Boots Up [UPDATED]

Social trading platform claims to be the first; it's not.
traders Roboinvest Boots Up [UPDATED]

Will these guys be replaced by citizen traders?

Want to trade stocks? Have no clue how? Roboinvest is the latest startup to launch out of New York for casual, insecure or curious traders. Like Union Square Ventures company Covester, Roboinvest is a social investing platform built on top of ETRADE that lets users “look over the shoulder of top investors” and follow their moves, sort of like AngelList does for startups and Currensee does for foreign exchange trading. The startup had a soft launch on Friday and opened officially yesterday.

“I’ve completed a seed round of funding from local investors as well as friends and family, and I’m working on completing an all cash angel round of funding which will allow us to build out the product and gain enough users to prove the business, or pivot if necessary,” Aussie-in-New-York founder Michael Giles wrote in a commemorative blog post.

Roboinvest’s timing is noteworthy. In the wake of a recession caused in part by the professional finance industry, technology seems to be empowering the small investor. Just yesterday, the launch of WeFunder reminded us that the Democratizing Access to Capital Act, which would allow non-accredited investors to put money into startups, passed the House of Representatives in a bipartisan landslide and is now being debated in the Senate. Power to the people! Soon we will all be making terrible funding decisions just like the big banks and venture capitalists can.

UPDATE: Mr. Giles writes in to clarify the statement in the press release: “Just to clarify out of interest – we’re ‘first-of-its-kind’ in that no one else is publishing trading information how we are – we have unique integration with E*TRADE that no one else has, and we can do it faster than anyone else can.  We certainly not the first, nor did we invent social investing, I’d give that credit to Covestor. Covestor is also built on Interactive Brokers who has 170,000 trading customers, E*TRADE has 2.8 million.”

Follow Adrianne Jeffries on Twitter or via RSS. ajeffries@observer.com

Comments

  1. Anonymous says:

    How interesting to get this news on the very day that Wealthfront ended its social investing platform, and pivoted 180 degrees to an all-ETF-all-the-time business model. Covestor was first, but Wealthfront achieved a critical mass (43 approved managers you could follow) and about $200m on its platform before giving up.

    I write as someone who was on Wealthfront and is currently on Covestor so I know whereof I speak. Mr. Giles is unwise to think that simply because eTrade has 15x as many clients as Interactive Brokers, that this makes his job easier. It doesn’t. Wealthfront never relied on back-selling IB customers, nor should they have: most IB clients are already repped by existing investment advisors, who weren’t going to allow their clients to go off on some unproven “over-the-shoulder-of-geniuses” investment platform.

    The problem with eTrade is that it’s oriented toward either day- or swing-traders, or to active investors who simply want low transaction costs. It’s not oriented toward passive individual investors, the kind of people who might want to invest “socially.”

    If the “integration” with eTrade mentioned by Mr. Giles includes co-marketing where Roboinvest is offered to every eTrade client, that would be a very powerful driver of clients and AUM. But if the integration doesn’t extend beyond a set of APIs, then he’ll likely meet the same fate as Wealthfront, which was almost genetically averse to marketing and relied solely on a “build-it-and-they-will-come” strategy.

    “They didn’t come, and now Wealthfront’s social investing experiment is over.