kaChing, a company that´s aiming to disrupt the mutual fund industry, raised $7.5 million in its first venture-backed round of financing, led by DAG Ventures.
kaChing is part of a young cohort of startups that are trying to democratize the fund management industry, by allowing individual investors to copy the trades of other skilled investors instead of turning to professionally-run funds that can charge around 3 percent in fees.
The Palo Alto-based startup recently opened up its site to anyone wanting to become an investor that others can follow, provided they share access to their real brokerage accounts and are active on the site for more than a year.
For example, if you´ve found an investor with an approach you respect, you can invest at least $3,000 and have allocations in that portfolio match the investor's moves. The manager will charge you a fee from between 0.25 to 3 percent, and kaChing will take a quarter of that. (The average fee tends to be around 1.25 percent.)
The holdings of these investors, dubbed “geniuses”, are public. kaChing signs legal agreements with them to ensure they follow the company’s policies and don’t front run (or improperly jump ahead of customer orders). There is also a message board for an investor’s followers to ask them questions about why they shorted or bought a specific stock.
The new investment comes on top of an earlier angel round with big names like Marc Andreessen and Ben Horowitz of Andreessen Horowitz, OpenTable CEO Jeff Jordan and Mike Volpi of Index Ventures. kaChing´s competitors include Covestor, a London- and New York-based startup that has a larger minimum investment and is targeting more professional managers.