Investing app Gotrade is entering the Indonesian market after raising $15.5 million in a series A round.
Gotrade, which offers stock and exchange-traded fund (ETF) investments without commissions, has launched in the Indonesian market, the company said in a press release Tuesday.
That follows the app raising $15.5 million in a series A round led by Velocity Capital Fintech Ventures, with participation from Japan-based Mitsubishi UFJ Financial Group (MUFG), Singapore’s BeeNext, Spain’s Kibo Ventures and Germany’s Picus Capital, the release said. In addition, U.K.-based LocalGlobe, U.S.-based Social Leverage and U.S.-based Raptor were returning investors in the round, Gotrade said.
The fresh funding is targeted at launching local versions of Gotrade in local languages and with local deposit methods across Southeast Asia, the release said.
Targeting Southeast Asia
«Investing in Southeast Asia is broken. Over 600 million people can't access quality investment products at fair prices,» Rohit Mulani, founder of Gotrade, said in the statement. He said mutual fund expense rations topped 5 percent, while savings products such as gold have 3 percent spreads. «We believe that investing should be fair and users should not have to bear these predatory costs,» he said.
The Gotrade app allows users to buy fractional shares of large stocks listed on the New York Stock Exchange (NYSE) and Nasdaq, with transactions starting from as low as $1, the release said. Gotrade said it doesn’t charge trading commissions, and instead generates revenue by charging 0.5 percent to 1.2 percent to foreign-exchange fees on the conversion to U.S. dollars.
Southeast Asia offers a large potential market for wealth management and investing startups.
Of the around 400 million adults in Southeast Asia, around 198 million are unbanked -- or don’t have a bank account -- while another 98 million are underbanked, with a bank account, but without access to credit, investments and insurance, according to the e-Conomy SEA 2019 report published by Google, Temasek and Bain & Co. in October 2019, prior to the start of the Covid-19 pandemic.
Offering U.S. Stock Trading
Gotrade Indonesia was launched in a tie-up with local brokerage Valbury, the Jakarta Futures Exchange and the state-backed Futures Clearing House of Indonesia, the release said. Gotrade said it chose Indonesia as its first market for a local version of the app because of the country’s high mutual fund fees. Gotrade Indonesia will offer derivatives to provide access to U.S. stocks as local brokerages aren’t allowed to offer foreign securities directly, the release said.
Financial services inclusion in Indonesia remains relatively low, despite the Covid-19 pandemic boosting acceptance and use of digital financial services. According to data in the 2019 Google, Temasek and Bain e-Conomy report, published pre-Covid, Indonesia had 92 million unbanked adults and 47 million who were underbanked, or who had a bank account but no access to credit, investments or insurance. Indonesia’s total population was around 273.5 million in 2020. The 2020 e-Conomy report showed Indonesia posted a 44 percent on-year increase in the use of selected mobile banking apps for the January-to-September 2020 period.
Malaysian Market
In March 2021, Gotrade launched its Malaysian platform on an invite-only basis after receiving clearance from the country’s Labuan Financial Services Authority, with the platform opening to the broader public in September 2021, the release said.
Gotrade said it has used no marketing, but has more than a half-million users on its app, the majority of whom are new to U.S. stock market trading.
In 2021, Gotrade raised a $7 million seed round from LocalGlobe and Social Leverage, which were both early backers of the Robinhood trading platform in the U.S., the release said.
Don Montanaro, of Velocity Capital Fintech Ventures, will join the board of Gotrade, alongside LocalGlobe’s Remus Brett, the release said. Montanaro was the founder and CEO at TradeKing before joining Velocity Capital, the release said.
