Gotrade, an app that lets international users buy fractional shares of U.S. stocks and ETFs, announced today it has raised $15.5 million in Series A funding. The round was led by Velocity Capital Fintech Ventures, with participation from Mitsubishi UFJ Financial Group, BeeNext, Kibo Ventures, Picus Capital and returning investors LocalGlobe, Social Leverage and Raptor.
The company’s last round of funding was $7 million announced in June 2021. Gotrade’s app was launched a year ago, after receiving clearance from the Labuan Financial Service Authority of Malaysia, and says it now has 500,000 users from more than 140 countries, acquired through word of mouth and customer referrals with no marketing. It has transacted about $400 million so far, across 5 million trades.
The startup was founded in 2019 by Rohit Mulani, Norman Wanto and David Grant. Its app lets users buy fractional shares in NYSE and Nasdaq-traded stocks starting from $1 USD. Gotrade does not charge a commission on its trades. Instead, it monetizes by charging a 0.5% to 1.2% foreign exchange fees if users deposit funds in local currency that is converted into U.S. dollars for trading.
The fee includes instant deposits, which means Gotrade users can start trading without needing to pre-fund their accounts. Gotrade is also testing a new membership tier called Gotrade Black, with premium features like candlestick charts, analyst ratings, target prices and risk measurement for $2 USD per month.
Part of the capital will be used to create localized versions of the app for more markets. Co-founder and CEO Rohit Mulani told TechCrunch that the startup is currently exploring all markets in Southeast Asia. That means launching Gotrade’s app in local languages with whatever deposit methods for cash are most commonly used, including local bank transfers and e-wallets.
One of Gotrade’s key markets is Indonesia, where Gotrade has launched Gotrade Indonesia.
When asked how Gotrade Indonesia differentiates from investment apps that have a fractional trading feature, like Pluang, or plan to add one, Mulani said Gotrade Indonesia’s specific focus on fractional trading enables it to power notional value trading of stocks with high share prices, like Tesla, due to its nine-decimal-place fractional share features.
“At the moment, other investment apps (like Pluang) have one decimal place in terms of fractional. This means it still costs a minimum of $333 and $285 to invest in Amazon or Google respectively on those platforms. It costs a minimum of $1 on Gotrade Indonesia,” Mulani said.
He added that another difference is that “unlike other investment apps offering CFDs (contract for differences), our products are fully backed by listed equities.” Since Indonesian brokers are not allowed to offer foreign securities within Indonesia, but instead have to offer derivatives of foreign securities, Gotrade partnered with Valbury Asia Futures, the Jakarta Futures Exchange and the Futures Clearing House of Indonesia, which are all overseen by Bappebti, the country’s derivatives regulator, to launch Gotrade Indonesia.
This allows Gotrade Indonesia to offer a fully backed derivative to give its users market access to U.S. stocks. Funds are sent to the Futures Clearing House, and trades are made through Indonesian financial conglomerate Valbury Group and registered on the Jakarta Futures Exchange. Then trades are sent to the Alpaca Securities LLC, a FINRA licensed broker-dealer in the U.S. and executed at the National Best Bid and Offer to adhere to U.S. Securities and Exchange Commission’s regulations.
This means that when a user trades on Gotrade Indonesia, it results in a contract between them and Valbury. Valbury’s corresponding trade with Alpaca Securities creates a fully hedged position.
Gotrade Indonesia says it is the first platform in Indonesia to offer this kind of market access for U.S. stocks, meaning that its users don’t have to go through a foreign stockbroker or trade CFDs locally while accumulating substantial fees.
Along with the launch of Gotrade Indonesia, the company announced it has added Andrew Haryono as a co-founder. Haryono is the owner of the Valbury Group.