Kaylene Hong was Asia Reporter for The Next Web between 2013 and 2014, based in Singapore. She is bilingual in English and Mandarin. Stay in Kaylene Hong was Asia Reporter for The Next Web between 2013 and 2014, based in Singapore. She is bilingual in English and Mandarin. Stay in touch via Twitter or Google+.
Getting burned on the stock market can be a devastating experience – as the co-founder of Singapore startup TradeHero can attest to. One of the reasons Dinesh Bhatia set up TradeHero, a mobile virtual stock market game, was because of the lack of information and therefore inadequacy in competing with bigger players on the market.
The greatest fool is always the institutional and retail investors… the man on the street is being underserved on financial and investment information, while institutional investors always have an in-road, and TradeHero is meant to democratise trading for everyone.
Bhatia would know best – he lost about $300,000 in 2007 when he invested in Palm, the maker of PDAs and smartphones, and TradeHero was borne out of a desire to help retail investors make better decisions on the stock market.
How TradeHero works
TradeHero has a similar concept to Fantasy Football – you basically trade on TradeHero’s virtual platform with a $100,000 starting portfolio, and the market moves according to whatever is happening in real life. Currently there are 22 stock exchanges on the platform from all over the world. Users are then ranked on a leaderboard based on a basket of metrics, including how much profit they have raked if the trade had been conducted in reality.
There are several virtual stock market games out there including Wall Street Survivor, StockTwits and iTrade, but TradeHero has included a nifty monetization model – making information access a premium. Basically, users who want to follow someone on the leaderboard (likely because they want to replicate the trading in real life to rake in some profit) will have to pay a fee. Part of this fee goes to the “leader” user as well, acting as an incentive to trade seriously on the platform.
The users on TradeHero are largely unknown – someone who is ranked high up on the leaderboard may be just a 9-year-old kid. However, the system weeds out those who make good trades based simply on luck as it measures the return on investment on an annualized basis – which means you need to conduct smart trades over a longer period of time to rank consistently among the best.
Investment, more users and a big push into China
TradeHero seems poised for greater success – Bhatia told TNW in an interview that he is currently in talks with investors after a roadshow was held in March and April, and is aiming to close upward of $5 million in funding. He is also targeting 1 million users on TradeHero by the end of this year.
When TradeHero was launched in January with funding of S$588,000 ($464,859) from TNF Ventures under Singapore’s National Research Foundation, it only had 20 users. Currently there are more than 200,000 users on the platform.
The targeted $5 million funding is a significant figure for a startup in Southeast Asia – and if it goes through successfully, it would probably include backing from Western investors seeing as TradeHero has a global appeal.
Though Bhatia declined to reveal exact revenue figures, he said the average revenue per user is much more than two times the cost per acquisition of each user.
Moving forward, the startup intends to launch a big push into China. TradeHero currently allows its users to trade on the Shanghai and Shenzhen stock exchanges, but Bhatia said he will be opening an office in the country as he seeks to boost marketing efforts to garner more users there.
China is a market with massive growth potential. There are already millions of online trading accounts in China, a prime example of their appetite for investment, and this number can only increase as more Chinese become financially savvy and seek a higher return on their investment.
Captive audience on TradeHero for banks and brokerages
One of the reasons why TradeHero appeals to investors is the number of users it can easily convert if needed. Bhatia said that banks and brokerages have shown immense interest in working with the startup to tap on the pool of potentially interested customers, given that TradeHero users tend to be passionate about finance and investment.
Banks and brokerages are always interested in engaging potential new customers, and TradeHero provides the platform to allow them to reach out to these potential customers. We structure the collaborations to add value for both users and financial institutions, for example by organizing a sponsored trading competition with cash prizes for the users, and the financial institutions will get to engage with potential top traders who would be interested in opening brokerage accounts or even joining as a trader on their staff.
Regional events and partnerships to drive engagement
Out of the 200,000 users on TradeHero’s platform, about 40,000 come from Thailand. Bhatia says he was initially surprised too, but realized that the Thais are very serious about their finances, and “the concept of TradeHero struck a chord with them on both fronts of monetizing their investment expertise, and learning about investing from Heroes”.
Mexico and India also have very strong showings, Bhatia noted, and of course Singapore too – where TradeHero is based.
All this information allows TradeHero to zoom in on countries and in turn, conduct partnerships and events to drive further engagement. For example, seeing that warrants (a type of financial instrument) are popular in Hong Kong, TradeHero will be running a warrants competition soon with cash prizes of up to S$30,000 ($23,717).
With a number of other plans to engage the existing user base and attract new sign-ups (after all, there are many people out there trying to learn more to trade better on the stock market), Bhatia says this is just the start of TradeHero’s journey.
Headline image via Thinkstock
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