INSUBCONTINENT EXCLUSIVE:
What Robinhood did to democratize buying individual stocks, Titan wants to do for investing in a managed portfolio
Instead of being restricted to rich accredited investors willing to pour $5,000 or even $500,000 into a traditional hedge fund that charges
2 percent fees and 20 percent of profits, Titan lets anyone invest as little as $1,000 for just a 1 percent fee on assets while keeping all
Titan picks the top 20 stocks based on data mined from the most prestigious hedge funds, then invests your money directly in those with
personalized shorts based on your risk profile.
Titan has more $10 million under management after quietly spinning up five months ago, and
this week the startup graduates from Y Combinator
Now Titan is ready to give upscale millennialsa more sophisticated way to play the markets.
This startup is hot
It refused to disclose its funding, likely in hopes of not tipping off competitors and incumbents to the opportunity it chasing
But it the buzz of YC, with several partners already investing their own money through Titan
When you consider Stanford-educated free stock-trading app Robinhood stunning $5.6 billion valuation thanks to its disruption of E*Trade, it
easy to imagine why investors are eager to back Titan attack on other financial vehicles.
We&re all 28 to 30 years old,& says co-founder
Clayton Gardner about his team
&We want to actively invest and participate in the market but most of us who don''t have experience have no idea what we&re doing.& Most
younger investors end up turning to family, friends or Reddit for unreliable advice
But Titan lets them instantly buy the most reputable stocks without having to stay glued to market tickers, while using an app to cut out
the costs of pricey brokers and Wall Street offices.
Titan co-founders (from left): Max Bernardy, Joe Percoco,Clayton Gardner
We all came
from the world of having worked at hedge funds and private equity firms like Goldman Sachs
We spent five years doing that and ultimately were very frustrated that the experiences and products we were building for wealthy people
were completely inaccessible to people who weren''t rich or didn''t have a fancy suit,& Gardner recalls
&Instead of charging high fees, we can use software to bring the products directly to consumers.
How Titan works
Titan wants to build
BlackRock for a new generation, but its origin is much more traditional
Gardner and his co-founder Joe Percoco met on their first day of business school at UPenn Wharton (of course)
Meanwhile, Titan third co-founder, Max Bernardy, was studying computer science at Stanford before earning a patent in hedge fund software
and doing engineering at a few startups
The unfortunate fact is the world of finance is dominated by alumni from these schools
Titan will enjoy the classic privilege of industry connections as it tries to carve out a client base for a fresh product.
We were
frustrated that millennials only have two options for investing: buying and selling stocks themselves or investing in a market-weighted
&We&re building the third.
Titan first product isn''t technically a hedge fund, but it built like one
It piggybacks off the big hedgies that have to report their holdings
Titan uses its software to determine which are the top 20 stocks across these funds based on turnover, concentration and more.All users
download the Titan iOSor Android app, fund their account and are automatically invested into fractional shares of the same 20 stocks
Titan earns a 1 percent annual fee on what you invest
There is a minimum $1,000 investment, so some younger adults may be below the bar.We&re targeting a more premium millennial for start
A lot of our early users are in the tech field and are already investing,& says Gardner.
For downside protection, Titan collects information
about its users to assess their risk tolerance and hedge their investment by shorting the market index 0 to 20 percent so they&ll earn some
Rather than Titan controlling the assets itself, an industry favorite custodian called Apex keeps them secure
The app uses 256-bit encryption and SSL for data transfers, and funds are insured up to $500,000.
How have its bets and traction been
doing &We&ve been pleasantly surprised so far,& Gardner beams, noting Titan thousands of clients
It claims it up 10 percent year-to-date and up 33 percent in one year compared to the SP 500 2 percent year-to-date and 22 percent in one
Since users can pull out their funds in three to four business days, Titan is incentivized to properly manage the portfolio or clients will
bail.
But beyond the demographic and business model, it the educational elements that set Titan apart
Users don''t have to hunt online for investment research
Titan compiles it into deep dives into top stocks like Amazon or Comcast, laying out investment theses for why you should want your money in
''the everything store& or &a toll road for the Internet.& Through in-app videos, push notifications and reports, Titan tries to make its
users smarter, not just richer.
With time and funding, &Eventually we hope to launch other financial products, including crypto, bonds,
international equities, etc.,& Percoco tells me
That could put Titan on a collision course with Wealthfront, Coinbase and the recently crypto-equipped Robinhood, as well as direct
competitors like asset managers BlackRock and JP Morgan.
If we fast-forward 10 to 20 years in the future, millennials will have inherited
$10 trillion, and at this rate they&re not equipped to handle that money,& says Gardner
&Financial management isn''t something taught in school.
Worryingly, when I ask what they see as the top threats to Titan, the co-founders
exhibited some Ivy League hubris, with Gardner telling me, &Nothing that jumps out…& Back in reality, building software that reliably
prints money is no easy feat
A security failure or big drop could crater the app brand
And if its education materials are too frothy, they could instill blind confidence in younger investors without the cash to sustain sizable
Competitors like Robinhood could try to swoop in an offer managed portfolios.
Hopefully if finance democratization tools like Titan and
Robinhood succeed in helping the next generations gather wealth, a new crop of families will be able to afford the pricey tuitions that
reared these startups& teams
While automation might subsume labor wages and roll that capital up to corporate oligarchs, software like Titan could boost financial
To the already savvy, 1 percent might seem like a steep fee, but it buys the convenience to make the stock market more accessible.
