Following our crowdfunding Q&A webinar, we have summarised answers to the questions that were asked by the audience.
Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.
What is the route to monetisation?
We will generate income from subscription fees to our app, and trading activity.
We have a freemium model so anyone can download the app and use it for free, and here is a description of the different pricing tiers.
Free tier (Strati-free) - £0 per month
Unlimited backtests
Trade stocks
Create a low risk momentum strategy.
Starter tier (Starter-Sphere) - £9 per month
Unlimited backtests
Trade stocks
Create up to 3 strategies with custom settings
Management allowance £10k per month
Auto-invest into money market funds to accrue interest from available cash
Advanced tier (Strato-Sphere) - £19 per month
Unlimited backtests
Trade stocks
Create up to 7 strategies with custom settings
Management allowance £24k per month
Access advanced strategy types.
Access advanced strategy setup controls.
Auto-invest into money market funds to accrue interest from available cash
For automated strategies AUM fees apply outside of the pricing tier management allowance of up to 0.9%pa.
Trading fees apply for self-directed trades of £2 per trade.
Our intention is to create an easy route into using the product with great value for those new to investing by offering the free tier with a fully automated strategy included, and then the priced tiers are designed to give you piece of mind that within the management allowance you have no fees to worry about other than the subscription fee.
In the short to medium term we plan to grow revenue by introducing tax wrappers, such as ISAs and JISAs. We will also look to expand to additional asset classes, new geographical markets, and to look for vertical integration opportunities.
We have additional opportunities to generate income, in particular from providing access to our tech via API to business clients and this is a route we are actively exploring. We recently received press coverage for this work, which you can read more about here.
Will customers be able to buy fractional shares via strategies?
Yes, customers will be able to buy fractional shares on a self-directed basis, and through a strategy.
Can investment strategies be adjusted?
You can adjust the initial set-up which includes the initial investment amount, sectors, regions, risk level and strategy type. Additionally, there are advanced features that will become available offering more functionality such as stop loss, purchase limits, lookback period, and more.
Once you create a strategy, you can see the settings you chose by clicking on the three dots in the top right of the card.
We will continuously add new features and controls over time, so keep an eye on the latest version of our app and on our newsletter for latest news on product development.
Are there plans for a Junior ISA?
Yes, we are planning to offer this in the medium term.
Would you consider high yield saving account providers like Plum/Chip, or execution broker accounts like Trading212/Nutmeg to be your primary competition? Which market do you see the product sitting in?
We regard our product to be within its own category of investment execution and analytics tools. In a sense we offer the best of both worlds.
You can trade on a self-selection basis, or access managed portfolios tailored to your requirements. You also don’t need to forgo the cash interest incentive with our money market funds, so we think we’re creating a new category with significant benefits.
We are targeting a similar user base to those companies, while offering a product that has more personalisation and flexibility.
What are the benefits of investing directly and not through funds?
More personalisation, and control and lower costs are the main benefits. A fund will provide you with a generic “already-built” portfolio mostly limiting your selection to a risk profile, which comes with in-built fund management costs.
With Stratiphy you get to choose what you want to invest in whilst in the composition of the fund is determined for you. A fund can provide you themes, but usually no clarity on the strategy; here you can backtest and select your professional strategy with full transparency. Our portfolios are invested primarily in single name equities, so you don’t have that underlying baseline cost to worry about.
When will I be able to fully use the product as an investor within the Strato-Sphere tier?
Trading features will be available this summer. If you invest £500 or more in this round you will get access to the Strato-Sphere tier as a reward. This will become available to you when the round closes.
What is your exit strategy?
There are many potential exits for the business especially given the number of large players in our market. An example of an exit from a peer in the space is Nutmeg, who were acquired by JPMorgan, and many other banks such as Morgan Stanley, Barclays etc have robo-type plays.
Our enterprise service offers a great segway into relationships with potential partners, who are interested in our technology to offer a more competitive service to their customer base, and we have already had conversations with companies that have expressed interest in this regard.
Is it just UK stocks?
At the moment yes. But we are introducing US stocks over the next few months, and we will be increasing our stock universe continuously.
Can you use your ISA allowance to invest in a strategy ?
Yes you will be able to when we introduce ISAs, this is planned for early 2025.
How do you mitigate trading risks on the app?
Strategies are rebalanced on a regular basis, and always subject to our approach of applying good practice when it comes to risk management. This means we employ sophisticated portfolio construction and risk management. Every strategy will be subject to market risk and events that can affect its performance. However, by rebalancing based on high-quality analytics of the market and your current portfolio we are constantly looking for the best performers according to the selected strategy and our proprietary algorithm, while also seeking to minimise risks.
Additionally, we provide users with educational resources including modules on risk levels and diversification. Our goal is to empower users with the knowledge and the tools they need to make informed investment decisions.
Are the management costs applied on an AUM basis or the strategy profits?
The management fee is applied on the total value of a portfolio managed by a strategy.
Is it possible to privately invest outside of crowdcube?
It is possible if the investment is £25k or over. The deadline to invest via Crowdcube is the 28th May.
What are the FX fees for S&P 500 stocks?
We will publish FX fees that apply shortly. We will be charging £2 per trade for all stocks.
Could you advise how the dividend investment strategy would work?
We are currently working on developing a Dividend strategy that would work by investing in the shares that have the highest dividend yield (annual dividends divided by the share price), while also incorporating other key metrics to help give confidence in the quality and sustainability of the dividend. This is seen as an Income Generating strategy (as opposed to a capital appreciation one) as the main component of return would be the dividends and not the change in price. To mitigate the impact of a fall in the price of the share, the strategy will need to be paired with risk management techniques and backtested to find the best level for the dividend yield.
As is our constant approach, we aim to give you a toolkit to automate your investments your way and Dividend, Value, Growth strategies are all important and well understood concepts that will form very interesting strategies and are likely to be popular with our user base.
Do Stratiphy own the IP for the UKRI funded work?
This was a point of negotiation with all parties, but we managed to retain full ownership of the IP.
Who calculated the c4.5m valuation?
This is based on comparisons in the industry and the progress that has been made in the business so far.
Our previous raise was at a £3m valuation, and since then we have received FCA authorisation, completed the development of our app, grown the team with some key talent and won the AI grant. All of this, we feel, justifies an increase in valuation since the last raise.
Is there an option to invest directly with EIS benefits or does everything need to go through CrowdCube?
If the investment is £25k or above, you can invest directly. EIS relief applies to all investments made via our Crowdcube pitch, and directly.
There was a previous research grant regarding carbon footprint metrics. Is this also planned to be implemented?
Yes. We wanted to develop the core product and technology first to later expand to carbon footprint metrics and other ESG metrics and be able to provide thematic strategies. This is one the keep an eye on as we still want to introduce sustainability features as soon as we can.
What are your next challenges growing the product in the market and what steps do you have in place to reduce them?
As our user base grows, so do the demands for new features and improvements. To keep on top of this we have a pipeline of developments that we are working through steadily. We are breaking down our development into manageable sprints, allowing for quicker iterations, while establishing a robust system for collecting and prioritising user feedback to ensure we are developing features that meet the most pressing needs of our users.
How will you engage users?
Community Building
We are fostering a strong and engaged community. Our efforts include implementing referral schemes to incentivise user growth, actively rewarding valuable user feedback and encouraging user interactions between users.
Digital Marketing
While we are just beginning to explore the potential of digital marketing, our initial experiments have shown promising results, with ad engagement rates exceeding 40% across platforms. This indicates our strong potential to retarget and attract potential customers with compelling, value-add content. Moving forward, we plan to expand our digital marketing team to consistently produce high-quality content that enhances our organic reach and reduces advertising costs. Our strategy includes generating educational content for both social media and our in-app learning - Strativersity.
PR
Our brand has already been featured in several major publications, and the impact of these mentions continues to grow. We are building meaningful relationships with news outlets to support future campaigns and secure regular exposure for new features, customer success stories, and more. This ongoing media presence will help us maintain visibility and credibility in the market.
Partnership Marketing
We are building partnerships with relevant organisations that have large audiences of retail investors, such as ed-tech platforms and market news outlets. A notable example is our recent collaboration with Finimize, which has an audience of over 1 million retail investors. Additionally, our B2B initiatives open up significant new audiences, as many of our business clients have extensive customer bases of their own. This presents a great opportunity for us to expand our reach and brand recognition
More of a comment. StratxAI had a similar offering in the past for retail investors however they pivoted to an institutional offering only. Excited to see your offering to retail investors with a quant approach.
Thank you for your comment, we are pleased to be able to serve the market with a solution we feel is greatly needed, and that will benefit so many people.