Millennials could soon be the biggest spending demographic in Australia and within the next few years may overtake the baby boomers. As we move into a focus on the tech savvy generation, consumer-led companies are looking at more ways to source investment opportunities.
Millennials have been responsible for creating and discovering new trends, which is why they are a great value to companies like Netflix and Spotify. ‘Netflix and Chill’ was coined by teenagers using Netflix as a social and more importantly nighttime activity. The catchphrase took off on social media and spread Netflix’s popularity around the world.
The great amount of influence millennials have is crucial to companies like Netflix, where growth patterns are determined by popularity and social media conversation.
The companies that receive a high amount of social media buzz from millennials also see high capital gains. While this generation is spending their money on products, there is little investment opportunity for them. Financial investment is largely targeted towards the wealthy, middle aged generation, which will soon contribute less to the economy and will be overtaken by the millennials.
Melbourne startup Wealth Fury is trying to design smart investment opportunities for the large millennial demographic. The fintech platform is specifically designed at young investors by building risk management tools to show people what to invest in.
“We thought how could we create something for them that would be useful for them? And also make them money,” said cofounder of Wealth Fury, Ryan Dinse.
Currently the platform is in the development stage, however Dinse said it will be designed solely for a smartphone. The first beta test will run in June where users will for the first time be able to download the app and test the platform for free.
Dinse understands that people in their 20s to 30s don’t have thousands of dollars to throw at startups and small businesses, which is why he wants to keep the minimum amount of investment low and feasible. Investment will start at $1,000 and will be invested across multiple companies.
Upon download users will be asked a range of question so Wealth Fury can create a risk profile. These questions aim to gauge what type of investment will be most suitable for the individual and upon completion will offer a mix of investment opportunities.
Dinse said he wants millennials to be aware of opportunities that are available to them. These opportunities are alerted via a notifications feature within the app, where users can answer yes, no or more information if they wish to proceed with the offer, pass or learn more about present opportunities.
“It will be very simple to use as it’s all about the user experience,” explained Dinse. “Wealth Fury tried to take these skills that this generation are already using and then use that to present these people with investment opportunities off the back of that.”
Wealth Fury works as a two way street. On one hand it offers investment opportunities, and on the other hand it’s a data collection and sharing platform. From time to time the app will ask its member base a series of questions relating to potential opportunities: for example the app will ask users what they think of the latest Domino’s Pizza app and how many times do they use the app. These questions provide necessary data gathering that Wealth Fury’s investment professionals want to know so they can work off customer insights and follow trends.
“There’s lots of opportunities where young people can make very good returns. That’s one side of the concept trying to look for new ideas, new creations and then the second is to leverage the network base,” said Dinse.
While being beneficial to millennial investors, Wealth Fury also aims to help companies promote their products. The more Wealth Fury members investing in a product, the better that product will do. Dinse says this gives the app a networking edge and encourages members to take an interest in what they invest in.
The process of finding and sourcing investment opportunities is based on trends and looking at where millennials are placing their money. Wealth Fury has investment professionals who overlay that process and use fundamental and technical analysis, and overlay that data with crowd analysis.
“You can use that data to look for trends well before they’re developed in the stock market and that will allow our members to hopefully get better investment opportunity than they would from trying to do it themselves,” explained Dinse.
As a point of payment collection, Wealth Fury will take a 10 to 20 percent cut of the profits made by their members. The exact figure is still being determined by the team, however Dinse said he wants to keep the platform fair and relevant to its demographic. In saying this, no fee will be charged for those who fail to make a profit.
Recently other fintech companies like Acorns, have been looking to target young investors. Acorns works as a micro-investment platform that invests a users digital loose change into a selection of funds. With Acorns investment can start from as little as 50 cents. The startup has recently launched in Australia and has already received lots of interest from millennials. While Acorns works off small investment opportunities, Wealth Fury wants to take those opportunities a step further, looking at larger opportunities, which lie somewhere in-between Acorns and AngelList.
In keeping with the Wealth Fury’s investment design, Dinse said the first alpha members will be offered a stake in the company: instead of raising initial seed investment, Wealth Fury will be taking investment from its membership base. If all goes to plan Wealth Fury will launch a beta test round and will officially roll out its product before Christmas.
Dinse already believes the platform has global potential and said he has received some early interest from a fund manager in the US.
He said, “The idea is, subject to some legal requirements we’re happy for this to be open globally from the get go. I would imagine that younger investors in other countries want to be treated the same. If the things go well in the alpha launch then we will open up the beta lunch as a global thing.”
Image: Ryan Dinse. Source: Supplied