Name: Hedgeness

Legal Name: Hedgeness, Inc

Location: Chicago, IL

Founded: 2016

Founder(s): Jay Singh and Kevin Porter

Website: https://www.hedgeness.com/

Social Media Following: 19 Followers on LinkedIn

Industry – Global Financial Analytics Applications Market

Size: $6.9B in 2018 (Source: Markets and Markets)

Projection: $11.4B by 2023 (CAGR of 10.7%) (Source: Markets and Markets)

Introduction

Hedgeness is a software-as-a-service (SaaS) platform that works exclusively with financial advisors, insurance carriers and asset managers to assist them in serving their retiree and pre-retiree clients better. The platform also helps these financial professionals work towards further growing their clients’ retirement assets along with protecting their savings from market swings. 

The Product

Hedgeness offers its users specialized SaaS applications that provide analytics and solutions exclusively for investment portfolios focused on retirement income distributions.

Powerful decision-making tools offered by the platform comprise enriched-data analytics, rule-based algorithms, and configurable technology. A secure, cloud-based platform powered by the proprietary ​​Hedgeness Income Engine – that incorporates the derivatives market – helps provide financial advisors, insurance carriers and asset managers valuable insights. 

Origin and Founding Team

Jay Singh serves as CEO and comes with over a decade of financial services and technology development experience. He joined Olde Investments in 1999 and his decade-long financial services career culminated with a stint at Morgan Stanley. Post this, he consulted on technology and finance strategy for startups and mid-sized companies.

Kevin Porter, CMO, heads consultative sales, marketing and customer success at Hedgeness. At his earlier stints, he has consulted corporate clients on due diligence, tax, and valuation matters for five years.

Srini Rao is CTO and guides the Hedgeness development team on architectural and digital strategy. He brings on board over 25 years of experience in the IT industry with a focus on technology platforms, product development, and enterprise architecture. His prior work experience has been in the banking and finance domains, providing IT services (TEKsystems, TCS) and working as a product developer (Dearborn Financial Services, Adeptia).

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Name: Apteo

Legal Name: Apteo, Inc

Location: New York City, NY

Founded: 2017

Founder(s): Shanif Dhanani, Manan Shah

Website: https://www.apteo.co/

Social Media: 176 followers on LinkedIn, 41 followers on Twitter, 15 page likes on Facebook

MARKET – AI in Fintech

Size: $6.84Bn in 2019 (Source: Mordor Intelligence)

Projection:  Expected to reach $26.92Bn by 2024 at a CAGR of 31.5% during 2019 – 2024

Introduction

Apteo helps financial firms, analysts, equity researchers, asset managers, and retail investors make better investment decisions through an AI and data science-based platform. This platform collates publicly available data and organizes it securely alongside the user’s proprietary data in a single catalog. This helps users recognize patterns across large pools of data without having to build and maintain an in-house data science and analytics team.

The Product

The Apteo data science platform maintains a central repository of data by continuously updating information from public sources and the users’ proprietary systems. This data is automatically cleaned, normalized and organized in a ready-to-use format that complies with regulations and user-defined information-sharing hierarchies. Users can glean insights from this central repository through deep-learning and natural language processing tools in the platform.

According to the website, the platform offers access to over 2 million datasets from 400+ publishers with data across 50+ years. Totaling over 1 billion data points, this data also includes information from alternative sources, such as social media chatter, etc. which are traditionally not studied by financial analysts.

Apteo’s minimum viable product was a specific instance of the platform described above. Dubbed Milton, it was an AI tool designed to help hedge funds and individual retail investors in the US stock market overcome their emotional biases and make data-driven investment decisions. The tool offered deep-learning based analysis of publicly available historical data, including pattern recognition of performance trends, and portfolio strategy breakdowns of successful investors. Following a soft launch to waitlisted investors and the general public in September 2018, the product has been running in beta. In a press release, the company claims that Milton outperformed the S&P 500 by 16% over 11 months.

Origin and Founding Team

Co-founders Shanif Dhanani and Manan Shah started Apteo in late 2017 with the idea of bringing investors and financial analysts significant information advantage through AI and deep learning. The idea was anchored in their experience across data science, options trading, investment banking, and hedge fund management.

Prior to starting Apteo, Shanif Dhanani had spent 10+ years across data science with TapCommerce and Twitter, and management consulting with Booz Allen Hamilton. Throughout this period, he also continued as an independent options trader on the side, which is where he initially recognized the significant investment advantage the right data can bring. Dhanani holds a B.S. in Computer Science from the University of Virginia and an MBA from the Leonard N. Stern School of Business (New York University).

Manan Shah had spent 12+ years across asset management with multiple hedge funds, including Point72, Shumway Capital, Centrebridge Partners, and investment banking with Morgan Stanley. Shah holds a bachelors in Finance from New York University.

Performance and trends

On January 7, 2019, Apteo raised a seed round of $100k from Entrepreneurs Roundtable Accelerators, an early stage venture capital and accelerator program based in New York City. As of publishing this article, we could not find any publicly available information about the company’s revenue.

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Selling and buying stocks online is a complex and expensive process, made tougher with steep account minimums, needlessly high brokerage, and elaborate processes. For years, these barriers have made the stock market a playground for the rich and kept the public at large out. Even today, research says that it’s the wealthiest in the US who own 81% of the stocks. It’s for good reason that millennials distrust aging financial institutions and are looking for easier, more interactive options to get things done.

With the entry of apps like Robinhood, Acorn, Stash, and numerous others, the internet has been abuzz with news declaring an all out pricing war between brokerage firms who’ve been compelled to slash their trading fee by almost 40%. And the clear winners, in US’ rapidly growing $5.8B fintech market, are apps that people are increasingly gravitating towards and are most comfortable with.

Matador is one of them. Like Robinhood, Matador’s app allows investors to trade stocks for free. The former, with the valuation of $1.3B, might be the dominant force in the market, followed closely by others like Acorn or Stash, but Matador has an additional feature which could lure in many young investors: an integrated social network which allows you to broadcast your trades to your followers and follow the trades of friends and professional investors in real time. This comes at a time when, according to Gallup, less than half of young Americans are putting their money in stocks. Researchers point to the 2008 market crash and the market’s recurring volatility as the main reasons why young investors are leery of investing.

How Matador Works

To get started, iPhone users (the app isn’t available for Android users, yet) can download the app and fill out their investment application. Users get an approval notification once the information is verified, after which, they can fund their account and start investing.

Some app reviewers have lauded its sleek and easy-to-use interface which has pages for individual stocks and trends associated with it. Users can look at information about the company they want to invest in and typical trading statistics such as the P/E ratio and market cap. But what sets this app apart is its feed of your personal Matador community (connected to Facebook) where you can see others’ portfolios and a list of stocks they own. However, if you are not too keen on the social feature, you can turn off sharing your portfolio or individual trades. In addition to displaying your own stocks, Matador’s social tab also allows you to browse the stocks the Matador community has most traded that week and present “a sense of which stocks are trending across the broader Matador community”. Concerns of social investing creating an investment bubble which inflates or deflates demand are somewhat relaxed with the knowledge that Matador only shows you where your friends have invested, not the exact amount invested.

Investing With Friends

The big, looming question at the moment, however, is Matador’s fee structure and how it makes money. The company says that it charges $0 for bank transfers (both incoming and outgoing) as well as no yearly maintenance fee. However, if you decide to transfer your securities or stocks to another brokerage amount, Matador will charge you (Its pricing for services like domestic wire transfer to automated customer account transfer service ranges from $30 to $75.) Most importantly, the startup dispels any concerns about security by claiming to have “bank-level security with 256-bit encryption” and brokerage services regulated by the Financial Industry Regulatory Authority (FINRA).

It isn’t clear how Matador makes money, yet. The startup says that it has cut costs by eliminating stuff like “maintaining fancy storefronts and opening accounts by snail mail”. The speculation is that Matador might be earning interest on users’ cash balance (although the app doesn’t have a minimum deposit requirement) or that in the coming years, it’ll go the Robinhood way of launching a paid advanced product.

There could also be the possibility of doing something with its distinctive social feature. The ability to see other’s trades and follow the trends of an overall community is what differentiates Matador from other apps. It’s also an add-on the startup is banking on: “Investing can be scary and costly,” is the startup’s brand position. “We built Matador to make sure that confusion, hassle, and expensive fees don’t get in the way of building a comfortable financial future.”

But the biggest advantage of the social feature, something that comes second to the fact that you can trade in Matador for free, is that the app can become a learning ground for young, first-time investors. By giving them ample opportunities to observe how other people trade, interact with those who are financially conscious, it can create sophisticated investors from the bottom-line, not just those who can afford steep brokerage.

There are, however, plentiful concerns about what investment apps are making people do. While social media websites are fighting for your time, these apps are also fighting for your money. Can they then inadvertently encourage people to take more risks than necessary? The argument in the favour of investment apps is that they’re finally making it easier for people to invest and encouraging a habit of saving but perhaps, they can go the extra mile in reminding users that despite the clear benefits, no investment is without risks or limitations.

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