If Scutify has not been a startup on your radar until recently, there is a very good reason for that: the company has been quietly working on its product offering in the background away from the noise of main ecosystem, avoiding press and marketing activities for the better part of 2014. But as the startup prepares to aggressively scale its user base in 2015, the company is beginning to build itself a reputation, especially across the growing space of financial technologies.
Founded by Kheang Ly, who has been working with his business partner Cody Willard, Scutify is a social network for investors and traders, as well as newcomers to the markets. Ly explains it as having similarities to Facebook, except with more of a core focus around a single subject matter – individuals that share a common interest around successful investing and trading. The engagement on the platform is enhanced by the platforms ‘Scutify All-Stars’ – hand selected people from the financial community, such as Hedge Fund Managers, Trading Coaches, Day Traders, and Long Term Investors that provide the community with an abundance of knowledge.
The way in which this knowledge is disseminated is via the company’s so called ‘iTunes of Finance’ model that allows users to purchase premium content like trade ideas and research reports, as well as getting access to trading rooms for as low as $0.99.
Even though Scutify is an Australian startup, it is beginning to experience some very solid traction within the United States. The way the founders split their time has Willard looking after a lot of things state-side while Ly, who is also the CEO of the company, concentrates on ensuring strong growth across all aspects of the business, with a focus right now of building a strong Australian user base.
“We spent 2014 focused on building and enhancing the platform and are quite happy with what we have,” said Ly. “For 2015 we are focusing on the marketing side of things and building our user base ,and getting the word out about what we are doing via different channels, including the media.”
Scutify appears to sit as kind of a hybrid between a media startup and a FinTech play. Given the fact that the front page is constantly changing every couple of minutes with new posts from users, it seems fairly safe to say that a degree of stickiness has begun to develop on the platform. Personally, I feel that the UI and UX could do with a bit of a tidy up. The front page for me is a little ‘busy’ – having said that, I am also well aware that perhaps I am not the target audience and that in its current format, the site does have a certain ‘reddit-like’ rawness about it that is definitely attractive to a particular niche audience.
The most interesting thing about the company to date, in my opinion, is the fact that in the last year it has raised two rounds of seed funding and, at the time, nobody caught a whiff of it. While it is not uncommon for smaller amounts of fundraising between $50,000 and say, $200,000 to often go unnoticed and unreported across the startup ecosystem, it is extremely odd not to hear about a round of $1 million in funding followed by a further $500,000 round less than 10 months later.
Scutify has taken a very different approach to raising capital, opting not to entertain the idea of having a single private investor or venture capital firm come on board – instead when it came to raising funds, Ky and Willard reached out to the platform’s early adopters, which is where they ended up raising all their funding. There are a couple of individuals and companies that own significantly larger shares within the company, with Ky and Willard remaining the majority shareholders, but Scutify actually has about 150 individual shareholders that own varying slices of the pie.
For most people – including myself – the thought of managing that many investor relationships at such an early stage of the business seems overwhelming and quite frankly like a bit of a nightmare. However, we need to remember that Willard in particular is a globally renowned professional in this space, having structured many deals like this throughout his long and successful career within the American finance sector. The investment to date has given Scutify a market capitalisation of US$25 million.
It should also be noted that having a platform’s early adopters as investors goes a long way in guaranteeing they stick with the platform and proactively contribute to its growth – skin in the game is always a successful formula for recruiting long term ambassadors for a new product or service.
Right now, monetisation of the application of the app is not number one on Ly’s priority list. The mechanism is in place and the startup is making money via its premium content services, but for Ly the future success of the business relies heavily on growing the users on the website as well as the Scutify app, which Ly claims already has over 120,000 downloads.