Banking entrepreneur Betsy Cohen is betting big on retail investing and the power of "social trading." The chair of FinTech Acquisition Corp V (FTCV), explains why she's backing a SPAC deal to take trading platform eToro public in the US.
eToro "has a social network platform that allows new investors and less sophisticated investors to learn and copy more sophisticated investors. That is a patented, differentiated offering that we think is very, very helpful to the investing patterns of young people," Cohen told Yahoo Finance on Wednesday.
The deal is happening at a time when retail participation in everything from stocks to crypto currencies is high.
"There is definitely a perfect storm that started," says eToro's founder and CEO Yoni Assia.
"We are the only global broker dealer offering commission-free stock trading in over 100 countries. Markets are at all time high and ... we're seeing a significant increase in the interest in demand of a whole new generation that are looking to invest in US stocks," said Asia.
eToro has more than 20 million users. Some five million of them signed up just last year. Assia says 2020 revenue grew by 147% from a year earlier. The company projects over $1 billion in revenues in 2021.
eToro already offers crypto services in the U.S and aims to expand into stock investing in the second half of the year. The expansion comes amid intense competition from apps like Robinhood, Coinbase — and greater scrutiny from American regulators.
"We believe firmly that retail investors should have access to the public markets and should participate in the public markets," said Assia.
He says for the majority of eToro's users signing up, this is their first time trading and their first brokerage account.
"As digital platforms like eToro scale either in the US or globally, obviously we do have a responsibility to make sure that our customers are educated about risk management," he added.
Cohen says eToro is very helpful at allowing users "not only to have fun but understand what they're doing."
"Investing is not a game, it's a very serious occupation, and eToro underscores and allows people to invest by communicating with one another and learning from one another in a very, very differentiated way," she added.
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre