Australian share trading algorithm startup Unhedged has raised just over $1.7 million in equity crowdfunding, having passed its minimum target of $350,000 within just 45 minutes.
The Birchal raise passed the $1 million mark in six hours, and is speeding towards its $3 million maximum goal with six days still to go.
At the time of writing, Unhedged has raised $1.72 million from 638 investors. But, according to founder Peter Bakker, this is just the beginning.
He’s out to disrupt and democratise a market on a global scale, and he has unicorn status in his sights.
Sign up for SmartCompany newsletter.
Free to your inbox every weekday
Founded in 2020 by serial entrepreneur and lover of algorithms Bakker, Unhedged is an app helping retail traders who invest through platforms such as Robinhood and Stake to make better investment decisions.
Most of these traders don’t have access to advanced tools, investment managers or advisors to help them build a strategy for their portfolio, he tells SmartCompany.
The startup automates these services through an “uber simple” app that allows them to choose an allocation for theory funds.
Ahead of its planned launch in July or August 2021, Unhedged has already amassed more than 5,000 people on its waiting list, all without much marketing activity to speak of.
That comes as a response to an uptick in the use of such trading platforms, partly due to the COVID-19 pandemic, and persisting low interest-rates.
“A lot of people who have tried these new platforms have discovered that trading is not so easy,” Bakker says.
They’re not necessarily seeing their portfolios performing as well as they would like.
At the same time, the founder says the whole structure of the market “rigged” against retail investors.
“This industry is broken and needs to be disrupted,” he says.
If you want to have high spreads of your funds and the best chance of high returns, then there is a chain of fees, with advisors, asset managers, and others each charging a percentage.
Unhedged charges based on performance, only charging when shares perform better than the benchmark.
“It is very important to disrupt this model,” he says.
“In the end we will be a lot cheaper and a lot more sophisticated than people can do themselves.”
“I’m building this company to become a unicorn”
Unhedged has already bagged two rounds of venture capital from Canadian firm Loyal VC. And the team is also still fielding inbound interest from other funds and investors.
However, Bakker felt an affinity between his business’ values and those behind the equity crowdfunding model.
It’s all about democratisation, he explains.
Unhedged is designed to open up the true opportunities of share trading to everyone, just as equity crowdfunding opens up investment to everyone.
“The user base is very aligned,” he says.
The funding will be used partly to continue investment in the team.
Already the startup has attracted Saskia Albers, former head of strategy at neobank Volt, as chief operating officer.
Michael Speight, former head of risk, compliance and financial crime at eNett International, also joins as chief risk officer.
Bakker is also looking to boost the UX, product development and tech teams, to build out a swathe of new products that are in the pipeline.
And this founder is thinking big. From day one he’s built the business to go international, and within the next couple of years he plans to launch in Singapore and the UK.
He also has eyes on countries like Mexico and Brazil, “where there’s a massive middle class but they’re underserved by this type of investment”.
Bakker also says he will prove to the market that you can run a fund using performance-based fees. That’s going to be a game-changer, he says.
“I’m building this company to become a unicorn.”