How one startup is shaking up the consumer trading boom

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Happy Saturday, everyone. We have a metric mountain of things to get through today. Below you’ll find notes on a fascinating startup round in the consumer fintech market, notes from the low-code world thanks to an earnings day interview with Appian CEO Matt Calkins, and quick hits on IPOs, Kidas’ venture capital round, a public building and NFTs. Let’s go!

How one startup is shaking up the consumer trading boom

Robinhood rode a wave of consumer interest in investing and trading all the way to the public markets. Despite some recent setbacks, the company remains evidence of how much interest there is in the market not only to buy stocks but also to make more exotic options trades.

It’s the latter that we’re talking about today. Options AI, a distributed startup with ties to Chicago has raised a $4.1 million Seed round. I’ve known the company for some time as I go back with a member of its founding team but haven’t had a chance to write much about it.

Now that it raised capital from three lead investors — Akuna Capital, Miami International Holdings and Optiver Principal Strategic Investments — and others it fits into our remit.

Essentially options are complicated, and many folks approaching the trading varietal lack the tooling and sophistication to make good choices when they dive in. If you doubt me there, ask your trading friends about their options strategy. It will be an illustrative conversation.

Options AI has built a tool that allows traders better see trades before they execute them and make better choices when it comes to multileg options and the like. It’s a pretty neat tool, and as someone who has long had a loose comprehension of how options trading works and is priced, it helped me grok.

But better charting is only a bit of why Options AI has held my interest. The other reason is that it is charging for trades. The startup has a flat $5 trade cost, which means it is swimming against the free-trading push that Robinhood, Webull and others have pursued in recent years.

Today Options AI works with equity options but told The Exchange that it may add crypto and futures options in time. The company describes its current moment as poking its head out from where it has been building and testing, content that its early traction and user data indicates that it is onto something. Certainly its new investors agree.

A data point on options before we go. Why are major consumer trading platforms so interested in options trading? Because it is lucrative as all hell. For example, options trading generated $64 million for Robinhood in Q3 2021. Equity trading brought in my $50 million. It’s a big business.

And with a flat-fee and PFOF revenues, Options AI could be in a pretty attractive market position if it can get enough folks to show up. Who is the startup’s target user? I reckon someone who has gotten into trading but wants slightly more specialized tooling. And Robinhood’s numbers indicate that there could be quite a few of those users out there.

More when we squeeze Options AI for trading growth data.

Shaking up the SaaS pricing market

Mostly TechCrunch has explored the SaaS pricing debate through the lens of subscription versus on-demand or usage-based pricing schemes. This is a good window through which to view market evolution as many startups today are born as APIs for which on-demand pricing simply makes more sense. And there’s some SaaS fatigue out in the market as well.

Enter Appian, which is doing something a little different. I caught up with the company’s CEO Matt Calkins this week after his company’s earnings call, expecting to chat mostly about the low-code market, process automation and process mining. We did talk about those things — Appian operates a connected set of software that allows customers to mine their processes for things to automate, helping them design and then automate as needed — but we wound up talking about pricing.

Appian has put together something called unlimited pricing, which is a sort of SaaS with an open-ended cap on use. SaaS is often priced per seat or per application, but Calkins et al. are trying something that feels like a mix of what’s good about SaaS and on-demand. Or more simply, by charging a flat rate for a year’s service and not limiting use, the company is effectively daring customers to use lots of Appian’s service and get stuck in with its platform.

Calkins was unnaturally clear for a public company CEO that the unlimited plan may offer some customers what works out to a very good deal. Saying that he likes to “innovate” on pricing, Calkins argued that while its unlimited pricing model could lead to a customer building a bunch of stuff using Appian tech and perhaps paying less than they might through a different pricing mechanism, it was just the cost for getting them to go all-in on using its tech.

At which point Appian will have a long-term customer that it can generate high-margin top line from. Not a bad trade.

IPO Roundup

Golly gee did we want IPOs and gosh darn have they not come. A roundup:

  • HashiCorp filed to go public, our dig into its numbers can be found here.
  • AllBirds priced its DTC IPO above range, and then ran up more points when it began trading. Pricing notes here, financial coverage here.
  • NerdWallet priced its IPO midrange, before trading higher. It has given up some ground since, but still had a cracking debut. Financial coverage here and here. (And shoutout to former TechCruncher Felicia Shivakumar, who once took a shot on your current scribe launching a video show for TC and is a very excellent human, but also now works for NerdWallet!)
  • Nubank filed to go public, our first look at some of its economics can be found here.
  • The Bird SPAC deal completed, and it didn’t have the best first day.
  • And, finally, Backblaze set first pricing notes for its own IPO, which we found fascinating given the company’s old-school revenue scale.

Various, sundry

  • Kidas ran into my eyeline this week, the startup works with parents to help keep kids safe in online gaming environments. It just raised $2 million, adding to its modest fundraising record. The company told The Exchange that it “unlocks new information for parents they otherwise wouldn’t have and this helps them to better connect with their kids over something they love.”
  • I will never be stoked about anything that gives authority more purview over underlings’ digital activities, but given the spiraling number of communications methods in the gaming world, parents are going to want some oversight.
  • Notably the startup says that its tooling doesn’t interfere with gameplay, so it doesn’t trigger anti-cheat software, which really, really matters.
  • More on the company later, but it’s based in Philly, which I dug.
  • Building goes public: Not in our IPO section, but a startup I’ve been passively tracking called LEX Capital Markets just took a single building public. The company has a really neat model. Worth peeking at.
  • And, finally, extending our recent NFT coverage, Mythical just raised $150 million for its NFT-infused game. Perhaps that’s where the NFT wind is heading.