Titan Has Raised $58 Million To Build An Investment Management Platform To Take On Likes Of Fidelity And Other Traditional Investment Funds.
Titan Has Raised $58 Million To Build An Investment Management Platform To Take On The Likes Of Fidelity And Other Traditional Investment Funds. The company aims to enable everyday investors access to investment experts, including a focus on investing in cryptocurrency, Titan Crypto. Andreessen Horowitz (A16z) led the round with participation from existing investors including General Catalyst, BoxGroup, and Ashton Kutcher’s Sound Ventures.
Titan said that what Fidelity and its iconic mutual funds were for baby boomers, Titan is for a new generations of investors, the company said. Other investors included pro athletes and celebrities, including Odell Beckham Jr., Kevin Durant, Jared Leto, and Will Smith. Anish Acharya, an A16z general partner, will be joining Titan’s board.
To date, New York-based Titan has raised $75 million to support the mission to lead the world to better wealth by enabling everyone to invest in the world’s success. The funds will be used to build out Titan’s underlying platform and suite of investment products, alongside scaling core functional teams.
Titan is the first direct-to-consumer (DTC), mobile-first investment platform where everyday investors, irrespective of wealth, can have their capital actively managed by investment experts in long-term strategies. Like investment giants before it, the initial strategies on Titan’s platform are predominantly in stocks (for instance, its large-cap growth strategy called “Flagship” is a modern version of the revered Magellan Fund). But the platform is quickly expanding into other asset classes, entering new territory where legacy players have yet to tread.
Joe Percoco, CEO of Titan, said in an email to VentureBeat that traditional investment management tools are like the tech equivalents of VHS videotapes.
“After years on Wall Street helping the rich get richer, we were bothered by the divide between institutional and retail investors,” Percoco said. “We were telling our own family and friends to invest in the ‘bland menu’ of exchange-traded funds (ETFs) and mutual funds because they couldn’t afford a wealth manager. Meanwhile, accredited investors had a secret menu of hedge funds, VC, etc. This divide frustrated us, so we built Titan.”
Titan grew by 500% in the last 12 months, largely organically, as everyday investors turned to the platform looking for active investment management without having to do it themselves. Titan is expecting to cross its first $1 billion in assets under management later this year, just over three years after launch.
Acharya said that Titan is reinventing investing for the Millennial and Gen Z generations, and it is adding transparency and the opportunity to learn. Of course, others are ahead in some respects. Robinhood is preparing to raise $35 billion in an initial public offering. While Robinhood promotes do-it-yourself investing, Titan focuses on in-house management of capital on behalf of clients while walking them through the steps of investing as they go.
Titan Crypto
Titan’s cryptocurrency investment focus will be launching soon. And it will be the first and only actively managed portfolio of cryptocurrency assets (easily) available to U.S. investors, the company said. The strategy seeks to invest in a concentrated basket of crypto assets that can outperform over a long-term time horizon.
It is actively managed by Titan’s in-house crypto investing team. At launch, Titan Crypto will be available to all U.S. residents except those with home addresses in New York. Access for New York residents will be provided once Titan’s custodial partner receives regulatory approval for the state’s jurisdiction.
How Titan works
Investing through Titan is meant to be easy. After a quick sign-up, clients choose to place their capital in one or more of Titan’s current investment strategies, including Flagship (large U.S.-based companies), Opportunities (small and mid-size U.S.-based companies), Offshore (international companies), and Crypto (concentrated basket of crypto assets). Titan’s minimum investment is $100, and both accredited and non-accredited investors can join. There are zero performance-based fees and no lock-ups. Each strategy is rigorously actively managed by Titan’s in-house investment team.
Titan clients also own the underlying fractional shares of the businesses in each investment strategy, offering greater flexibility when compared to pooled vehicles like hedge funds and mutual funds.
“The mutual fund or an exchange-traded fund (ETF) is fundamentally just a piece of technology for an investment manager to accept money from someone in order to invest in securities like a basket of stocks,” Percoco said. “We think this piece of technology is like a VHS tape. It does the job, but it’s archaic for a few reasons.”
The investment manager can’t talk to the client. A mutual fund is a black box. This is bad for a lot of reasons, he said. On top of that, the investment manager has no idea who the client is. When you buy an ETF, you’re just an anonymized dollar value, Percoco said. And these products have layers of costs, have high minimums, and are difficult to create, he said. The factory that creates the mutual fund itself is very old.
“Believe it or not, the entire investment management industry (i.e., the use case of someone giving their money to an investment expert) is predicated on these VHS tapes,” Percoco said. “These are the archaic technologies being used. We’re rebuilding it entirely. Fidelity is an old factory. Titan is effectively a new factory.”
With Titan, investment managers can talk to clients (see the in-app video messages they send to explain market situations). The clients aren’t anonymous and so Titan can personalize investment recommendations for them. And Titan’s products can be created faster, better, cheaper,” he said.
“Like investment giants before it, the initial strategies on Titan’s platform are predominantly in stocks (for instance, its large cap growth strategy called “Flagship” aims to be a modern version of the revered Magellan Fund),” he said. “We’re already getting in-bounds from multi-billion dollar managers asking to launch products on Titan.”
Titan was founded by Clayton Gardner, Maxwell Bernardy, and Percoco. The company has 30 employees, and it hopes to have 100 a year from now.
This news was originally published at Venture Beat.