Superhero secures $25 million as share-trading trend gains momentum

Aussie share-trading and superannuation startup Superhero has secured a massive $25 million in funding, valuing the business at more than $100 million.

The round was oversubscribed, and includes repeat backing from Afterpay co-chief Nick Molnar and Zip’s Larry Diamond. Finder co-founder Fred Schebesta also contributed, along with Regal Funds Management and Thorney Investment Group.

Founded in 2018 by wealth management veteran John Winters and Booktopia chief technology officer Wayne Baskin, Superhero started life as a share-trading platform designed to make the investment process more transparent and accessible.

The co-founders set out to disrupt the traditional online investment industry, offering a $5 flat fee. Superhero also differentiated itself by offering access to stocks listed on the ASX, rather than US-listed companies.

Superhero secured $8 million in seed funding in August 2020, before launching in September. Within its first three weeks, it had attracted 10,000 customers, and by November the platform had 20,000 people on board.

In December 2020, the co-founders announced plans to launch a new superannuation offering, also designed to demystify the sector and give consumers more control over what their savings are being invested in.

Today, Superhero has some 58,000 users, Winters tells SmartCompany. And that figure has increased by 1,000 since this morning.

“We are seeing pretty rapid growth,” the founder says.

And the rate of growth is only accelerating, mostly through word of mouth.

This fresh capital will be used to continue building out the product, and also to start focusing on marketing efforts, to reach yet more Aussies.

However, he also reveals the funding will “lead us towards IPO” within the next 12 to 18 months.

“We see there being a big opportunity in Australia to offer a product that’s significantly better than the incumbents,” Winters explains.

Trending up

Superhero is tapping into an ongoing trend, driven partly by the economic slowdown. Interest rates remain stubbornly low, so people who have disposable income are increasingly looking for ways to make their money work harder for them.

According to data from ASIC, between late February and early April 2020 — at the very beginning of the COVID-19 crisis in Australia — the average value of securities traded by retail brokers increased from $1.6 billion to $3.3 billion.

There was also a sharp increase in the number of retail investors trading for the first time.

In fact, according to the ASX, of the 9 million Australians who trade on the ASX, 24% made their first trade within the past two years.

In August 2020, competing online investment platform Spaceship raised $10 million in funding, with founder Andrew Moore suggesting the pandemic was shifting the way in which young people were thinking about their finances.

And in the US, platforms such as market leader Robinhood saw a considerable uptick in activity from day-traders.

That was then “turbocharged” in early 2021, as day traders set to disrupt short sellers by driving up the price of GameStop shares.

Winters suggests this is not a trend that’s going away any time soon. The pandemic may have accelerated things, but it essentially comes down to control and transparency, he suggests.

“There’s this generational shift in mentality towards investing, and everybody wants granular control over what is theirs,” he explains.

Just as people use Netflix to watch what they want when they want, instead of following traditional programming, and just as people use Spotify to choose what to listen to and when, instead of listening to the radio, people want some control over what they’re invested in — whether that’s through share trading, ETFs or their super fund.

Previously, the only way to get that was through a self-managed super fund, which is only advised if an individual has $500,000 or more to invest.

“That locks the other 99% of the market out.”

Now, Winters hopes to see innovation in this space. Superhero is taking the fight to the incumbents, and he wants them to become more competitive, to drive the whole industry forward.

“I do hope there is a shift, and I hope we’re at the forefront of that,” he says.