Titan Secures $12.5M Funding for Next-Gen Investment Management
Titan Secures $12.5 Million Series A Funding to Revolutionize Retail Investment
Titan, a burgeoning startup focused on developing a retail investment management platform geared towards millennials, has successfully completed a $12.5 million Series A funding round. The investment was spearheaded by prominent venture capital firm, General Catalyst.
Investor Participation
A diverse group of investors contributed to this funding round. These include Sound Ventures, the venture firm founded by actor Ashton Kutcher and Guy Oseary, alongside Scribble VC, BoxGroup, Y Combinator, South Park Commons, and Instagram co-founder Mike Krieger. Lee Fixel also participated in the round.
Significant Growth and Momentum
Titan experienced substantial growth throughout 2020, achieving a 600% increase in revenue, customer base, and assets under management. This expansion occurred despite a minimal marketing expenditure, according to co-founder Joe Percoco. The New York-based firm is currently managing nearly $500 million in assets and achieved cash flow positivity in the previous year.
Founding Story and Origins
Percoco and co-CEO Clay Gardner first connected while students at the Wharton School of the University of Pennsylvania. Their differing backgrounds in investing proved to be a foundational element of the company.
Percoco described Gardner as an early adopter, having purchased his first stocks at ages 11 and 12. In contrast, Percoco didn’t begin investing until after his tenure at Goldman Sachs following his graduation from Penn.
Addressing a Market Need
Both founders observed a consistent pattern of friends and family seeking their guidance on managing their finances. They initially directed these individuals towards ETFs and mutual funds during their professional roles.
However, they recognized a disparity in access to quality investment opportunities. Those with greater wealth consistently enjoyed superior investment options.
Disrupting the Traditional Investment Landscape
Driven by a desire to level the playing field, the pair established Titan in 2017. Their objective was to challenge what they perceived as an outdated industry. They aimed to create an operating system that would grant “everyday investors” access to investment products and services traditionally reserved for high-net-worth individuals.
Essentially, they envisioned a mobile-first version of the investment infrastructure built by established firms like Fidelity and BlackRock over decades.
Investment Platform Details
Titan’s platform caters to both accredited and unaccredited investors. It provides access to services that historically required a $1 million minimum investment, such as direct interaction with portfolio managers. The company’s fee structure is a straightforward 1% of assets, significantly lower than the 2% – and sometimes 20% of profits – charged by traditional investment firms.
Percoco articulated a vision for “Fidelity 2.0,” characterized by direct-to-consumer access, transparency, and the elimination of hidden fees.
Transparency and Simplicity
According to Investopedia, black box accounting involves intentionally complex financial reporting methods that obscure clarity and prolong analysis. Titan actively avoids this practice.
The startup’s stock selection process is based on “proprietary and discretionary” research, leveraging the principals’ extensive experience.
Investment Strategies Offered
Currently, Titan offers two distinct stock-focused investment strategies. The Flagship strategy concentrates on large-cap growth stocks, while the Opportunities strategy targets smaller, less-publicly recognized companies.
Target Demographic
Titan’s primary customer base consists of young professionals aged 25-35. These individuals are already engaged in some form of investing, even if it represents a limited portion of their overall finances.
Gardner noted that this demographic is acutely aware of the benefits of investing and is actively seeking suitable options. However, many existing asset management products remain outdated, relying on lengthy documentation and opaque processes.
Differentiation from Existing Platforms
As highlighted by former TechCrunch editor Josh Constine, Titan distinguishes itself from self-directed platforms like Robinhood and E*Trade, where users are largely responsible for their own investment decisions. However, it also differs from fully passive options like Wealthfront and Betterment, offering clients a degree of control and active management.
Future Plans and Expansion
The newly acquired capital will be allocated to expanding Titan’s engineering and investment teams. Significant investments will also be made in product development, marketing initiatives, and operational improvements. The company intends to introduce several new investment products spanning various asset classes.
Percoco believes that established financial institutions are recognizing the need for modern operating systems to reach new generations of investors. He noted inbound inquiries from legacy players interested in leveraging Titan’s platform to manage capital for a broader audience.
Investor Perspective
Katherine Boyle, a partner at General Catalyst and a member of Titan’s board, emphasized the founders’ “deep empathy” for investors who are often underserved, particularly millennials and new investors with available capital but lacking guidance.
Boyle stated that these investors desire expert management without necessarily wanting to become active stock pickers or relying on entirely passive investment strategies. She believes actively managed products can provide value to retail investors.
Addressing a Lack of Trust
Boyle also believes Titan is well-positioned to capitalize on a growing “deep lack of trust” among millennials towards traditional financial institutions.
“We need new institutions like Titan to combat this lack of trust,” Boyle said. “And these new institutions need to have incentives that are aligned with their clients, not with hedge funds or banks.”