Stockspot: A flagship investment for FinTech venture capitalists, the Heap brothers

- June 23, 2015 3 MIN READ

Yesterday, Stockspot, Australia’s first automated investment advisor and fund manager, announced that it had raised an additional $1.25 million in funding as it continues to grow and expand its business. This is the second round of funding for the FinTech startup that raised $250,000 from the since folded AWI Ventures program last April.

Unlike its first round of funding, founder Chris Brycki said this time he met with a few interested parties before settling on terms with fintech venture capital firm H2 Ventures and the investment arm of Rocket Internet Global Founders Capital, whose other high profile Australian investments include peer-to-peer lending business Society One and disruptive design platform Canva. Brycki told Startup Daily that he was pleased that brothers Ben and Toby Heap who originally invested in the first round via AWI Ventures were on board in continuing to support the startup via their new fund H2.

H2 Ventures was just recently set up by the brothers after the the parent company of AWI Ventures, ASX listed Australian Wealth Investors withdrew its support for the VC fund. Even though Toby was in charge of AWI Ventures and Ben is the CEO of Australian Wealth Investors, the pull of support came about due to the demise of financial services company Van Eyk, in which the parent company had made an investment. This led to a complete restructure of the business and the Heap brothers setting up H2 Ventures.

Like AWI Ventures, H2 will not just make investments in the FinTech space, but will also run a FinTech focused accelerator program to feed its investment pipeline. In a model that mirrors AWI, H2 will invest $100,000 in each startup and will take 10% of equity in return, therefore valuing each startup going through the accelerator at $1 million. AWI Ventures ended up investing in nine companies and there are five of them currently going through the last ever AWI program – these include CurrencySpot, Piggy, PayHero, HashChing and Deposits. The other four startups from the initial program include Simply Wall Street, Equitise and Debtto10K. H2 Ventures currently operates out of the Stone and Chalk financial startup coworking space and also intends to open up offices in Auckland and Palo Alto.

Stockspot has been one of Heap brothers’ flagship investments, one that has seen steady growth since it first launched into the Australian market. Currently Brycki claims there are over 3,000 registered users on the platform; and client funds under management are up 300% since the beginning of the year, though Stockspot is not sharing the dollar figure that this equates to with the media.

This particular round of funding will be used in two key areas of the business, according to Brycki. The first is to improve the product; and the second is for marketing activities to increase awareness around what Stockspot is doing. This will be one of the biggest challenges in terms of growth for the Sydney based startup who has found a surprise niche in Australian expats living overseas.

“We found that we have a lot of Aussies working in the UK that have become early adopters of the platform,” says Brycki. “Usually when people move overseas they just leave their money in an Australian bank account and they don’t really know what to do with it. A lot of those people are getting frustrated because they don’t gain much interest but then they can’t go and set something up with a bank because they’re overseas. Since we’re the first completely online product, Aussies working overseas are able to set up an investment plan or investment service really easily. [Stockspot] is getting an unusually high number of expat customers.”

Another major way the company is looking to reach the wider community is via a solid content marketing strategy and in-depth insights. In fact, the insights are very much akin to the types of conversations and learnings you would gain from sitting down face-to-face with an advisor, with Stockspot almost being a ‘digital-handholder’ around financial literacy.

“Most people stuff themselves up when they invest because they invest according to their behavioural biases,” says Brycki. “We make these types of  bad decisions because our brain makes us think a certain way about investing when we shouldn’t. A lot of our work around educating consumers is about improving the financial intellect of our clients and educating them about this sort of thing. That’s why we’re publishing a lot of research and writing a lot of content around helping people make better decisions.”

“I guess the reason why we’re putting a lot of this content and research out as well is because we want to be seen as the consumer champions in finance, the company that is actually standing up for all the little guys out there that seem to get ripped off.”

This sentiment is evident when you analyse the type of research activities Stockspot has been undertaking. Last November the company released the Fat Cat Funds Report which highlighted dodgy activities in the sector. This was well received by customers and potential clients, but according to Brycki, the industry hated it. The advantage that Stockspot has over traditional players in the space is that it has no legacy business it needs to protect, and can therefore afford to be a little polarising with its marketing efforts.

Image: Chris Brycki, Founder, Stockspot. Source: Supplied.