Young investors face a plethora of issues when trying to find actionable information to motivate their investing decisions. These Gen-Z’s and Millennials have created makeshift solutions such as informal group chats on WhatsApp, Messenger and GroupMe to share information and learn from one another. Darian Bhathena, Jack Phifer, Michael Liu and Roger Cawdette believe that as the younger generation’s involvement in the stock market increases, they will need a dedicated investing platform built around their communication habits, leading them to create Finary. Finary calls itself “Discord for investing.” The startup has recently raised $3.2 million seed round led by Aditi Maliwal of Upfront Ventures, with participation from Dash Fund and prominent angels including Lenny Rachitsky, James Beshara, Daniel Pourasghar, Pragma CEO Eden Chen, Mahdi Raza and Hannarae Nam, and Tik Tok personal finance creator Austin Hankwitz.
“It’s clear that retail investing as a form of entertainment is a huge opportunity and a trend that’s here to stay,” said Aditi Maliwal, partner at Upfront Ventures. “The Finary team lives and breathes the Gen Z audience, not just because they are the audience but also because they are laser-focused on building an incredible experience for the next generation of investors. We’re excited to support their journey.”
Frederick Daso: Having raised this fresh round of funding, what particular areas of Finary are you trying to build on or explore to meet your users’ needs?
Roger Cawdette: There’s a lot that we could do with this new round of funding, but our team is particularly excited to build great community management tools for our users. Through testing, talking to our users, and working with some brilliant minds who’ve built great consumer products, we’ve learned that it can be pretty difficult to oversee and maintain an online community, big or small. Admins have to ensure that there’s a constant stream of things to talk about, make sure users are interested in the conversations, and moderate bad actors who might be harmful to other members. It’s a significant responsibility that many first-time group owners have little to no experience in, so we’re looking forward to making their lives easier so they can focus on building the best investing communities.
We’re still exploring the exact tools we want to build. Still, we’ve already gotten started with some basic moderation features, for starters. We’ll be rolling out an analytics dashboard to help community managers understand the topics and particular stocks their audience care about. The benefit of having this new injection of capital is that we’ll be able to expand our design and engineering teams, meaning we’ll quickly make adjustments or build out entirely new features in response to the feedback from our users.
Daso: What was the process for deciding what new features to build for this segment of your consumer fintech user base?
Michael Liu: Aside from the usual surveys, user interviews, and forum-scouring, we placed a lot of emphasis on contextually observing our users’ current behaviors. That meant asking young investors to show us their private GroupMe’s, their iMessage chats, their Reddit history—and diving into all of that content one group at a time. Without the help of a second pair of eyes, it was hard for users to extract and articulate their pain points. But by going directly to the source, we were able to understand better how we could improve upon what’s out there.
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Daso: What were some of the key insights you discovered through talking with users as you did your initial market research?
Liu: We started work on Finary under the assumption that young people were willing to share everything on social media—even their investments. But we quickly learned that we had overestimated that willingness to participate and that most young investors are still wary about talking stocks with strangers. With that insight in mind, we’re striving to connect our users with people they know and trust instead of sending their investing information into the unknown.
Another common misperception is that young investors are all risky, but our research once again proved us wrong. From experience to wealth to risk tolerance, young investors are more varying than other investing demographics. What we’re building offers value to any investor—not just the new, risky day traders.
Daso: What do these insights suggest about future consumer behavior in consumer fintech that you’re building Finary around?
Cawdette: Right now, we’re focused on redesigning investing to be a more social and collaborative process but, soon enough, it isn’t hard to imagine that Gen Z consumers will be in search of the same themes across other financial services like wealth management and lending, to name a few. Deciding which ones we’ll end up targeting down the line, if at all, is a matter of speculation, but it’s exciting to think about the impact on financial services that we’ll be able to have.
Daso: We are all aware of the recent WallStreetBets subreddit phenomenon that drove a major surge in Gamestop, AMC, Nokia, and other “meme” stocks in the financial markets. How exactly has WSB’s influence validated your thesis driving Finary?
Cawdette: In the future, we’ll look back and realize that the r/wallstreetbets episode was the most significant inflection point in retail investing history. Before 2020, it was very much the case that consumers, young people, in particular, would engage with their investments very individualistically, making decisions almost entirely alone. But many factors came together all at once to ignite this new age of social investing: a pandemic occurred, markets bottomed out, and people across the country were stuck at home and deeply in need of new forms of entertainment. Stimulus checks in hand, young people began making their way into the stock market, but something important was missing: community.
What WSB has confirmed is the simple idea that people want a place to engage with others around investments. In this place, they can discover new investment opportunities and source opinions from trusted sources. There’s room for improvement, so we’re excited to tackle those issues head-on with Finary.
Daso: There’s a common mantra that an easy way to build something for others is to build something you would use. Yet, there’s a danger of becoming too attached to the product or service you’re building, thus blinding you to feedback about what your users truly want. How do you and your team avoid this potential trap as you build Finary?
Liu: The most important thing is to recognize where you might have confirmation bias—and for us, there’s always two sources that we keep in mind. First, we’re all tech people—design patterns that we think are “obvious” aren’t necessarily intuitive to everyone. Second, we’re all young investors, so there’s a danger of assuming that we perfectly represent our target demographic. After the recognition step, we avoid these pitfalls by constantly playing Devil’s advocate. If I propose a feature that I feel is fail-proof, the other three will step up and ask, “What if?”
Daso: With raising money comes the expectation of scaling. But not all things scale equally, such as culture. How do you ensure that your culture scales as Finary grows to maintain the behaviors and expectations that brought the startup this far?
Cawdette: There are two aspects of culture here – internal and external. With the latter, we’re fortunate enough to be building in a space where the activity around investments grows at an incredible rate. For reference, r/wallstreetbets 10x-ed in size over a year and is still going. So realizing this, we’re working around the clock to set up the social infrastructure with Finary that’ll allow this cultural investing boom to continue.
On the internal front, we’ve had the chance to hear and learn from a series of remarkable founders through YC, like the founders of Airbnb, who have built top-notch company cultures. Because of this, it’ll be a major priority of ours to be very particular about who we hire and the type of work environment we create. As the famous story goes, Airbnb’s founders interviewed every hire up until around employee #500 and were meticulous about preserving the company’s culture and values. Coincidentally, some of our angels were early employees there and played a part in scaling that culture, so we’re excited to learn from them as we build our own.
Daso: Every founder says they are building the next big thing, especially among social consumer startups. What’s your pitch to those who either want to experience or help build a future digital investing community?
Cawdette: The cool thing about working at Finary is the opportunity to get in on the ground floor and take on responsibilities that you wouldn’t be able to in something like big tech or finance. From my experience of being a founder, it’s been incredibly rewarding to have major autonomy over my work, a direct say in the company’s direction, and push myself professionally beyond my imagination. We’re designing our culture to be one where any team member will have all of these same benefits and more. I might also add that we’ll be investing heavily in company hangouts because having fun and creating an environment where everyone enjoys the people they work with will make all the difference.
If that doesn’t sound amazing, there’s also the kicker of the fact that our team gets to build the future of financial services for a whole generation of consumers. It’s an immense responsibility and privilege, but we’re excited to take it on and bring on some of the boldest, most ambitious, creative thinkers who want to come along for the ride.