An app that lets people play the stock market without the risk of losing any real money has turned its virtual cash game into a pile of actual Benjamins, by closing out a $10 million funding round — one of the largest Series A rounds for a consumer startup in the region, it claims.
The app in question, TradeHero, is made by a Singapore-based developer MyHero. Investors in the round are Kleiner Perkins Caufield Byers China fund (KPCB China) and IPV Capital.
TradeHero users start out with $100,000 in virtual cash to spend, choosing which and how much stock to ‘buy’ — there are no live trades going on here, it’s a simulation — and getting to see whether their trading decisions would have panned out IRL because the app follows actual market movements.
Dinesh Bhatia, CEO and Founder of MyHero Ltd, the holding company for the TradeHero iOS app, describes it a “financial literacy tool” that uses gamification to engage users and help them learn how to improve their trading.
It’s part ‘fantasy football’ style game, part trading learning tool, part stock market tip resource — the latter aspect because TradeHero’s most successful traders become part of a leaderboard that other users can pay to follow so they get the inside track on their (successful) trading decisions (leaderboard members also share in these winnings — giving them an incentive to keep virtually trading on TradeHero’s platform).
Has TradeHero made Bhatia a better trader? I ask because he got the idea for the app after losing “a lot of money on the stock market” by betting on Palm’s webOS rebirth. Oops… “It has,” he says. “If you followed me [on TradeHero] I’m up 50% from January this year when the app launched. The market has been good this year, but still that’s pretty good. But I’m nowhere near the top [of the TradeHero leaderboard].” Ergo, there’s still lots to learn.
Other aspects of TradeHero’s business model include in-app purchase options, to monetise engaged users — by offering them things like the ability to buy more virtual cash so they can increase their liquidity, or the ability to reset their portfolio entirely so they start again afresh. TradeHero also has a b2bc revenue stream via tie-ins with financial companies wanting to reach an engaged community of users — provided whatever they’re trying to get access is relevant to its audience, says Bhatia.
“Most of our [learn how to play the stock market] rivals do live trading [such as the eToro social network]. We are more about monetising off the information brokerage. In a way we’re focusing on the research — we can call it micro-research — which is user-generated… rather than focusing on the trading. These are tips that you can then use, once you subscribe to TradeHero to actually bridge the gap to live trading, and hopefully make better decisions,” he adds.
So now it’s landed a $10 million Series A, what does MyHero intend to do with the money? Bhatia says it plans to spend the funding on a big marketing push for TradeHero over the next 18 to 24 months. The app launched seven months ago, and has since built up a user base of around 280,000 — three-quarters of whom he says are active on a bi-monthly basis, emphasising that those figures have been achieved working with relatively limited resources.
TradeHero was actually incubated out of TNF Ventures, taking in a seed round of around $500,000-$600,000 about a year ago, with backing from Singapore’s National Research Foundation. Landing such large follow-on funding will allow it to ramp up its marketing efforts on several fronts, he says, including targeting user-acquisition effects at markets such as the U.S. and Europe which it hasn’t really had the “firepower” to focus on to-date. It’s also planning to translate the app into more languages to help grow its reach further.
Markets where TradeHero has been getting traction to-date include Asia and South America, with Bhatia specifically singling out Thailand, Singapore, India, Mexico, Vietnam and also the U.S. as places where it’s garnered a following. “TradeHero is available in more than 200 countries. We’ve been number one in the finance category on the iOS App Store in 75 countries. And top 10 in about 100 countries right now,” he adds.
Part of the new funding will go on ramping up the startup’s headcount, to support its marketing efforts and market growth push. In the latter area, China will be a key focus over the next three to six months. “We’ve got our sights on China. China has a lot of online accounts, brokerage accounts. The interest is potentially very, very high in something like this,” he says. “We have tried and tested in markets like Hong Kong, Singapore and Taiwan where the mindset is very similar. China is a very, very big market for us.”
The Series A round is actually double the amount TradeHero has previously said it was aiming to raise this year. Expect the extra money to go towards a new, presumably complementary app — although Bhatia won’t comment specify on what it’s working on yet.
But fuelled by at least some of that $10 million — and the addition of an Android app to expand TradeHero’s mobile platform reach — this time year he says he’s hoping the app will have amassed a user-base that’s “in the couple of millions”. “We’ve done close to 300,000 users now with seven staff, with a very limited budget, with just iOS. I’m very confident that we can hopefully be in the two to four million user range,” he adds.