Top Deal: Reinventing Investing From The Ground Up

Key Stats:

Summary

ChoiceTrade Holdings has been selected as a “Top Deal” by KingsCrowd. Today, we are reiterating this Top Deal rating, reserved for the top 10% of all deals across the market. If you have questions regarding our deal diligence and selection methodology please reach out to hello@kingscrowd.com.

The Opportunity

When I started investing back in the mid-2000’s, brokerage accounts where you invest in stocks and bonds were intimidating. Be it the fee’s that could be as high as $10+ per stock trade, the dense charts and stats, or the high minimums to open an account, it seemed like a world built only for the sophisticated investor.

However, thanks to the rise of mobile-first brokerage accounts like Robinhood and micro-investing accounts like Acorns, the barriers to investing have been torn down in a drastic way. Investing is becoming the every woman’s and man’s sport thanks to these easy to use tools and with that comes significant market growth.

It is estimated that the brokerage market is growing to $205B over the next 5 years driven by the enhanced access to automated investing tools, fee-free brokerage accounts and growing interest in alternatives like crypto and startups.

One team capitalizing on all of these trends with one unified solution is ChoiceTrade Holdings, a 19 year old veteran of the brokerage market with a new set of product features that have the potential to be a game-changer in the brokerage market.

The ChoiceTrade Difference

What ChoiceTrade is building is a brokerage account solution that not only provides access to your everyday Google and Facebook stocks, but also gives users the opportunity to invest in crypto and startup companies all in one place.

Better yet, if you are new to investing, ChoiceTrade is building a micro-investing solution that enables you to invest as little as $10 into a diversified portfolio of US stocks.

Essentially, this brokerage account is taking out all of the challenges of investing not only in the stock market but also crypto and startups regardless of your experience and providing one incredibly simplistic and affordable solution to do so with no fee trading.

While Robinhood offers limited crypto trading, it does not offer micro-investing in diversified portfolios and Acorns only allows you to invest in diversified portfolios rather than do single trades too. Moreover, neither of these platforms, which are the most similar competitors to ChoiceTrade have made efforts to offer private market securities on their platform.

The larger incumbents like Charles Schwab and Merrill Lynch are nowhere near providing the level of creative investment solutions nor as affordably as ChoiceTrade.

In short, ChoiceTrade provides the most comprehensive brokerage account on the market with the most investing options at the best price. Further differentiating it from its competitors is its global reach. The team is already present in over 100 countries.

From a competitive set standpoint, ChoiceTrade has an opportunity to be a major winner in the fast evolving brokerage account market.

Why We Like it

1. Fast growing market: Sources on stock brokerage account growth are tough to find, but triangulating across various data points pegs the growth rate at a little north of 20% in 2018 on 128M customer account with $3.6T in balance sheet assets.

For an industry that has been around for 40+ years, that is surprisingly outsized growth, which is being driven by innovators like ChoiceTrade and at latest valuation, $5B Robinhood, which are forcing fees to be reduced and making stock investing way more accessible.

Needless to say, this is a vast market with fast growth. Both of these items are bullish in ChoiceTrade’s favor.

2. Established track record: With 19 years in the market, a 4 star rating from Barron’s, and nearly a million in revenues last year with healthy gross margins as pictured below (65%), we think the business is de-risked from other early stage investments with lower revenues and higher burn rates.

Having established meaningful revenues driven from over 3,000 accounts with many end-consumer product offerings we think the ChoiceTrade team has established itself as a legitimized and proven business that can go the distance.

In many ways they have hit a plateau with the original core business (being the more traditional stock and options trading), but have identified an opportunity to grow significantly to the next level through crypto, startup and micro-investing solutions.

3. Unique product set: As mentioned above, the team is working to offer the most comprehensive suite of investment solutions on the market. No one else on the market offers the breadth of investment products (be it startups, options, diversified funds, etc) ChoiceTrade is aiming to provide users.

The fact that they are looking to offer investors the ability to trade startups alone is incredibly innovative and forward thinking. As you all know, we have the thesis that private market investing on platforms like Netcapital and StartEngine could surpass the public markets in terms of volume over the next 10 to 20 years, since so much value creation occurs before companies ever go public.

The fact that ChoiceTrade wants to offer one streamlined solution to do so is extremely forward thinking and could provide significant upside to their business in the coming years as more investors look to invest in private companies. They are filling a major market gap in the private sector right now, which is a brokerage account.

Imagine being able to invest in companies across marketplaces, be it Wefunder, StartEngine or Netcapital all from one account. This along with their crypto investing capabilities as well make this one of the most innovative brokerage accounts on the market.

4. Global opportunity: ChoiceTrade is already in 100 countries, and when it launches its micro-investing app, which will allow investors abroad to get into a bundle of US stocks with as little as $10, they will be opening the doors to upward growth very quickly.

There is an unmet demand abroad for a solution like ChoiceTrade, which they can tap with an easy to use, low minimum, diversified investment solution. This is also an area that other competitors have not focused as keenly on, which provides a real upside for the organization to pursue.

The Team

Neville Golvala has spent the last 20+ years in the online broker game and has been with ChoiceTrade since it was founded. Prior to his role at ChoiceTrade he spent time as Managing Director at National Discount Brokers, which was acquired by Deutsche Bank in 2000, and later by Ameritrade.

Ronald Buckner , EVP, CFO and COO has been with the business for the last 19 years as well and has developed/overseen all of the companies tech development. He also spent time at ICAP, an inter-dealer/broker well known in the industry, and as CEO/CFO of a company called Delta Clearing Corp.

ChoiceTrade is equipped with a stable and experienced management team that has extensive years experience working and building in the financial services sector with an emphasis on the brokerage/exchange markets. This bodes well for the organization.