SoftBank Group Corp. 9984 -0.18% is investing in startup investing platform Atom Finance, in a bet by the Japanese conglomerate that a retail trading boom is here to stay.
Atom Finance, founded in 2018, lets individuals track investments and research holdings. In addition to SoftBank, existing investors General Catalyst and Base Partners also took part in the latest $28 million funding round. The investment values Atom at around $150 million, said a person familiar with the matter.
Atom was founded by Eric Shoykhet, who covered financial services firms and other sectors from 2015 to 2018 at hedge fund Governors Lane. He believed falling trading costs would prompt more individual investors to trade. This meant that they would need new kinds of tools to guide them.
‘The narrative we never bought into was that active investing was dead,’ said Atom Finance founder Eric Shoykhet.
Photo: Atom Finance
In 2019, major brokerages launched no-commission stock trading to stave off the threat from digital upstart Robinhood Markets Inc. Now, all kinds of brokerages compete against each other for retail traders with free trading having become a booming business. It has been particularly transformative in the past year as more investors with free time during the pandemic have wielded growing power over markets, sending meme stocks such as GameStop Corp. soaring.
Atom isn’t a trading platform but it has still been a beneficiary. Hundreds of thousands of users have signed up since its platform launched in 2019. Paying customers increased in the past year, though the firm declined to provide exact details about user numbers.
“We think a lot of that increase in investor participation in markets is here to stay,” said Mr. Shoykhet, 29 years old. “The narrative we never bought into was that active investing was dead.”
Mr. Shoykhet hopes his firm will grow as individuals seek cheap tools to help them invest. A full Atom subscription goes for $9.99 a month, a fraction of how much a Bloomberg Terminal costs.
Atom also plans to license its product to banks and brokerages.
SoftBank led the Series B funding round in Atom through a $5 billion fund it created to focus on Latin America. It reflects SoftBank’s wager that the rise of individuals in U.S. markets will take off in that region too.
This year, Atom pursued a deal on its own to provide products for Banco Inter, a digital bank in Brazil that SoftBank’s Latin America fund has also invested in. Shu Nyatta, managing partner for SoftBank’s Latin America fund, said SoftBank later introduced Atom to other portfolio companies in hopes of fueling similar deals.
“The whole idea is to bring high-quality data to people who wouldn’t have access to them,” he said.
Mr. Nyatta said he was drawn to Mr. Shoykhet’s opportunism and willingness to make Latin America a strategic focus. Mr. Shoykhet recently moved to Miami and is planning to open an office there, in part to make it easier to do business with Latin America.
But there is one thing Atom Finance isn’t planning to do for now: It doesn’t want to become a trading application.
Mr. Shoykhet is skeptical about many e-brokerages’ practice of routing trades to big trading firms in exchange for payments. The industry has defended this practice, known as payment for order flow, arguing that it lowers the cost of trading for individuals. Others argue it hurts investors as firms will encourage heavy trading by users to maximize profits—even if those investors take too much risk.
“We don’t think it has users’ best interests in mind,” he said.
Write to Dawn Lim at [email protected]
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