kaChing: facebook for the day trader
Line BreakAuthor: Eli Magid (12 Articles)
Eli is an Associate at the Widebridge Group, a Herzliya based investment banking boutique and was previously with Morgan Stanley Tel Aviv. In addition, he is a financial markets entrepreneur and co-founder of a green start-up which utilizes carbon finance to prevent rainforest destruction in developing countries. Eli began his career at Credit Suisse, structuring over $15 billion of debt securitizations across a diverse credit and product spectrum. Eli has a BSc in Applied Economics & Management from Cornell University.
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One financial web start-up that launched its API in late 2008 and appears to be gaining a lot of momentum is kaChing (previously called FSX). In addition to its social investing site which has a community with extremely high user interactions, it is currently one of the most popular apps on facebook.
kaChing is a social investing site which allows anyone to create a $10 million fantasy portfolio while enabling interaction within the community regarding hot stocks, strategies and markets movements. Think facebook for the day-trader.
Although this idea is hardly new (check out Covestor, Vestopia, and Cake Financial) when it comes to social apps the devil is really in the details and this is where kaChing seems to be taking an early lead.
Some unique kaChing features:
- Managers – The basis of the kaChing framework is that of following and communicating with a network of “managers.” Managers are individuals who have been active kaChing users for at least a year and have proven and transparent performance records. Manager activity can be easily flagged and tracked in real-time, allowing you to be notified whenever they make a trade.
- Convenient filters and screens – One can easily screen for managers whose strategies, sector and performance record you’re interested in. Some screens include investment styles like “long” or “short”, industry concentration, risk-adjusted return performance and beta.
- Awesome visuals and charts – Xignite, a leading cloud computing provider of Web services for financial market data and applications provides kaChing with well organized up-to-the-minute financial information to its users.
- SEC registered investment advisor – kaChing has received SEC permission to allow its members to link their brokerage accounts to the portfolios of their favorite managers and automatically follow their trades.
- Management fees – Heavily followed managers can earn management fees from their followers. For instance, let’s say 2,000 followers each invest $10,000 through a real brokerage account that mirrors a manager’s portfolio. If the management fee is set at 1%, the manager will earn $200,000. Will this break the mutual fund model by democratizing investment management? That may be too early to tell. However this unique feature is definitely likely to increase membership while also being a source of revenue for kaChing which will be taking a margin on these management fees.
According to TechCrunch, the company has raised capital in an angel round from Marc Andreessen, OpenTable CEO Jeff Jordan, Benchmark Capital partner Andy Rachleff, and Kleiner Perkins partner Kevin Compton. Bruce Dunlevie of Benchmark, Doug Mackenzie of Kleiner, and former Opsware CEO Ben Horowitz also participated as investors
While the size of the round was not disclosed, these investors clearly think kaChing will own up to the onomatopoeia which is its name. Makes sense. We social network like maniacs. Why shouldn’t we also socially invest?
Line BreakAuthor: Eli Magid (12 Articles)
Eli is an Associate at the Widebridge Group, a Herzliya based investment banking boutique and was previously with Morgan Stanley Tel Aviv. In addition, he is a financial markets entrepreneur and co-founder of a green start-up which utilizes carbon finance to prevent rainforest destruction in developing countries. Eli began his career at Credit Suisse, structuring over $15 billion of debt securitizations across a diverse credit and product spectrum. Eli has a BSc in Applied Economics & Management from Cornell University.
