The Great Gatsby Raises Millions to Compete with Robinhood

Millennial and Gen Z Investment Trends Fuel Startup Growth

Recent indications suggest a heightened interest in investment activities among Millennials and Generation Z. Consequently, numerous startups have surfaced in recent years, aiming to provide them with expanded investment avenues.

Gatsby Secures $10 Million in Series A Funding

Gatsby, a rising startup in the fintech space, announced on Monday the successful completion of a $10 million Series A funding round.

The investment was led by Techstars Ventures and Beta Bridge Capital. Additional backing came from a network of “super angels” facilitated by ClearList, alongside an oversubscribed campaign on SeedInvest. Previous investors, including Barclays Bank, SWS Venture Capital, and Rosecliff Ventures, also participated.

Founding and Early History

Established in 2018, Gatsby was co-founded by Jeff Myers and Ryan Belanger-Saleh. The pair previously achieved a successful exit with Dealtable.com, a social data room platform.

The company developed a commission-free options and stock-trading app specifically designed for younger investors.

Key Personnel and Strategic Leadership

Peter Quinn, a founder of the stock-trading platform Public.com – which recently secured $220 million in funding at a $1.2 billion valuation – currently serves as Gatsby’s Chief Operations Officer. He was also the company’s inaugural hire and is regarded as a core member of the founding team.

Focus on Safety and Accessibility

Gatsby differentiates itself by concentrating on a younger demographic and striving to offer “a safe and fair platform.” This platform aims to prevent users from overextending themselves or being excluded during periods of market volatility.

The app became available on both iOS and Android in early 2020, and has experienced a doubling of signups since the start of 2021.

Trading Trends and Popular Assets

The platform has also observed a surge in trading volume, with cannabis and meme stocks consistently ranking among the most actively traded assets.

Challenging Robinhood with a New Approach

Gatsby intends to compete with Robinhood by providing commission-free trading, eliminating per-contract fees, and avoiding complex financial terminology. Furthermore, the app incorporates a rewards program, allowing users to “get paid to trade.”

A built-in social network facilitates the sharing of trade ideas and allows Gatsby users to discuss their investment successes and setbacks.

Payment for Order Flow (PFOF) Strategy

According to Myers, “We believe that PFOF (payment for order flow) is a fundamentally better pricing model than commissions for users trading on small accounts as long as customers feel like their broker is being fair and honest about execution quality and how they make money.”

Upcoming Feature: Gatsby Circles

In the second quarter, Gatsby plans to introduce “Gatsby Circles,” a feature enabling traders to form groups with friends to follow and share trades, and receive notifications when someone within their circle executes a trade.

Expansion Plans and Team Growth

The newly acquired capital will be utilized to facilitate “aggressive growth” throughout 2021. The company intends to expand its engineering and brokerage operations teams.

Myers stated that the current 12-person team is expected to grow by an additional “10 to 20 heads” over the next three quarters.

Account Growth Targets

Gatsby’s objective is to surpass 100,000 accounts by the end of the current year.

Future Development: Research Tools and Crypto Trading

The company also plans to launch enhanced research tools for experienced options traders, alongside more sophisticated trading strategies. Future plans include the integration of cryptocurrency trading features.

Adaptive User Interface

Gatsby is developing an adaptive interface that utilizes an algorithm to assess each trader’s experience level and tailor the feature set and interface accordingly.

Investor Confidence and Market Positioning

Jordan French, an early investor in Gatsby and publisher at Grit Daily News, believes that Myers and Belanger-Saleh possess “the right combination of technology and marketing experience to grow Gatsby into a defensible position that will be very difficult for competitors to unseat.”

He also emphasizes the alignment between the company’s approach and the values of its investor base.

Disrupting Traditional Finance

French added that Gatsby aims to “shed the “fat-cat cronyism” of legacy financial institutions.”