This online stock brokerage for beginners platform wants to let regular Joes and Janes experience the joys of dividends – and learn from each other
Have you always wanted to participate in the stock market but felt intimidated by how much you don’t know?
A new online stock brokerage called Stox wants to hold your hand while you buy stocks in publicly traded companies. To that end, the startup has raised $8 million in Series A funding led by Moshe Hogeg’s Singulariteam.
The real thing
Unlike many other online trading platforms, says Elliot Hool, the company’s VP of Marketing, “We don’t trade in CFDs, which is contracts for differences, we deal in real stock.” Contracts for difference are generally riskier than owning securities of a company, or stock, because they allow you to bet on the starting and closing price of a given asset through buying CFDs, which you can purchase more of than stocks at any given time. The losses and gains are also paid for in cash through the CFD broker.
On the other hand, when someone goes on the Stox platform, he tells Geektime, they buy an actual piece of a company like Facebook or Teva.
“We’re talking about long-term investments for 10, 15, 20 years. We’re providing a platform to do it. It’s not a game.”
What differentiates Stox from a flesh-and-blood stockbroker, says Hool, is that “We’re a brokerage for modern times.” When you go to a stockbroker you have to tell them what to buy, but that is based on the assumption you know what you’re doing.
The best artists steal
With Stox, you can be an absolute beginner. There are stock news and tweets on the sites as well as how-to articles covering the basics of investing. The online platform also allows you to follow your investments every day and see what others are doing on the site. So if you’re an inexperienced investor, you can follow what a successful investor is doing and even copy his investments.
“Most people when they go to a trading platform today, what they see is this black screen with graphs,” says Hool.
By contrast, Stox explains what is happening step-by-step and on top of that, lets you see what others are trading. This social aspect of the trading gives a newbie investor more confidence. They don’t have to invest alone. Meanwhile, the top traders or skilled traders on the site can offer their insights on the platform for money.
“They can name a price to allow you to follow them. You can see how they built their portfolio, get notifications when they make a trade. You can also piggyback, take money and put it on that trader proportionately.”
Hool says that Stox differs from competitors like Scotttrade and E-trade in that it is much more accessible and user-friendly, “demystifying the world of stocks.”
Based in Cyprus
The company was founded by Roy Shaham and Or Arbel in 2013 and is just now emerging from the beta stage. It is licensed in Cyprus and regulated by the Cypriot Securities Commission, while its R&D center is in Israel.
Hool says the service will officially launch in the UK in the middle of June, then roll out in Europe in the next few months. It may possibly expand to the U.S. in 2016.
When asked about the Cyprus connection, Hool explains, “To operate a business like this, an online brokerage, it operates out of Cyprus.”
Hool assures Geektime that the company takes all the precautions to make sure investors are suitable. “If you’re not suitable, we won’t allow you to invest. We check how much money you make, how much you’re willing to invest. You have to have a bank account, we don’t accept credit cards.”
What if some 13-year-old starts spending thousands of dollars on your site with his bar mitzvah money?
Hool says such a person wouldn’t pass the initial screening.
“Like all licensed stockbrokers, we’re obliged to take precautions,” and this also applies to companies licensed in Cyprus, he assures.
From Yo to Stox
This funding round was led by Singulariteam, a venture capital fund helmed by Moshe Hogeg, who has also funded StoreDot and was behind the surprise success story of Yo.
“We are always looking for companies that turn traditional sectors on their heads, and Stox has the potential to make online trading effective, accessible and fair without forcing users to sacrifice the quality or legitimacy of the trading environment,” said Moshe Hogeg in a statement. “The ability to emphasize accessibility while still delivering a premium offering is what sets Stox apart and the addition of key social functionalities offers a new experience for more seasoned traders to improve their interaction. Whenever you can both widen access to new audiences and bolster the experience for those who are already using similar products, the potential is enormous.”
Featured Image Credit: Stox