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Titan has raised $58 million for an investment management platform to take on the likes of Fidelity and other traditional investment funds. The New York-based company has raised $75 million to date, and the funds will be used to build out its underlying platform and suite of investment products, along with scaling core functional teams.
Titan aims to give everyday investors access to investment experts, with a focus on investing in its Titan Crypto cryptocurrency. Andreessen Horowitz (A16z) led the round, with participation from existing investors, including General Catalyst, BoxGroup, and Ashton Kutcher’s Sound Ventures.
Other investors in the round include pro athletes and celebrities like Odell Beckham Jr., Kevin Durant, Jared Leto, and Will Smith. Anish Acharya, an A16z general partner, will be joining Titan’s board.
Titan says it is the first direct-to-consumer (DTC), mobile-first investment platform where everyday investors can have their capital actively managed by investment experts. 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 territory where legacy players have yet to tread.
Titan CEO Joe Percoco 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 Titan is reinventing investing for the millennial and Gen Z generations and is adding transparency and the opportunity to learn. Of course, competitors are ahead in some respects. Robinhood is preparing to raise $35 billion in an initial public offering, for instance. But 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.
Titan will soon be kicking off its cryptocurrency investment option, which will be the only actively managed portfolio of cryptocurrency assets (easily) available to U.S. investors, the company said. The idea is to invest in a concentrated basket of crypto assets that can perform well over the long-term.
This portfolio will be 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 and 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.
In this scenario, the investment manager can’t talk to the client. A mutual fund is a black box, which 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 high minimums, layers of costs, 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.
Titan was founded by Percoco, Clayton Gardner, and Maxwell Bernardy. The company has 30 employees, and it hopes to have 100 a year from now.
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