Rask - Raiz Invest Ltd (ASX:RZI): How micro-investing in Australia became $1.7 billion
Raise Invest, originally launched in Australia in 2016, was adapted from the US-based Acorns to fit the Australian market. The platform aims to democratize investing by allowing users to invest small amounts into diversified portfolios, breaking traditional barriers to entry. It offers nine different portfolios, including superannuation and a property fund, and has expanded its services to include a rewards program and a unique Bitcoin investment option. The company has seen significant growth, with funds under management reaching $1.7 billion and a market cap increase from $50 million to $80 million. The business model includes charging maintenance fees based on account balances and offering additional features like the Raise Rewards program. The platform's focus is on customer education and providing a user-friendly experience, which has contributed to its success and customer retention. Future plans include expanding customer base, enhancing product offerings, and maintaining a focus on innovation and customer satisfaction.
Key Points:
- Raise Invest allows micro-investing with as little as $5, offering access to diversified portfolios.
- The platform has grown to manage $1.7 billion in funds, with a market cap increase to $80 million.
- Revenue is generated through maintenance fees and additional services like Raise Rewards.
- The company focuses on customer education and user-friendly experiences to retain and grow its customer base.
- Future plans include expanding product offerings and increasing active customer numbers.
Details:
1. Welcome and Introduction 🎤
- Brendan is introduced as the guest on the show, representing 'raise invest'.
- The discussion will focus on 'raise invest's' portfolios and business strategies.
- Listeners can expect insights into investment methodologies and strategic planning.
2. Origins and Early Success of Raise Invest 🌱
- Raise Invest began by bringing the Acorns platform from the US to Australia in February 2015.
- The team spent 10 months adapting the platform to fit the Australian market, converting currency from US dollars to Australian dollars and modifying banking terminology.
- Extensive focus groups were conducted to ensure product-market fit, targeting strategies, and marketing approaches.
- Raise Invest officially launched on February 10, 2016.
3. Innovative Investment Strategies 💡
- The investment platform's Australian launch succeeded by lowering barriers with innovations like roundups and micro-investing, attracting new investors.
- Fractional ETFs on the ASX enabled investments from just $5, democratizing access to diversified portfolios and challenging traditional investment minimums.
- Initial offerings of five portfolios have expanded to nine, including superannuation and rewards programs, demonstrating robust product development and adaptation.
- After rebranding from Acorns to Raze, the company listed on the ASX, raising $15 million for Southeast Asia expansion, operational in Indonesia, Malaysia, Thailand, and Vietnam, reflecting strategic growth.
4. Business Evolution and Growth Strategies 📈
4.1. Leadership Transition and Market Focus
4.2. Market Perception and Growth Trajectory
4.3. Managing Business Complexity and Enhancing Customer Focus
4.4. Diverse Revenue Streams and Portfolio Options
4.5. Advanced Investment Options and Fee Structure
5. Customer Engagement and Education Initiatives 📚
- A training program was implemented to let customers experiment with ASX 100 stocks, enhancing their market understanding without significant risk.
- Customer account balances have increased from an average of $2,500 two years ago to over $5,000, indicating improved customer engagement and investment behavior.
- The platform achieved $183 million in net inflows in 2023, contributing to a total of $1.7 billion in funds under management, demonstrating strong financial growth.
- Automated technology features were introduced to save users time and help them comprehend compounding interest, thus boosting financial literacy.
- Educational messaging is provided to help users understand savings and interest, encouraging consistent small investments, which improves customer retention.
- Liquidity is ensured by allowing investment retrieval within 2-5 working days, enhancing user trust and flexibility.
- A property fund was introduced, focusing on investment in residential properties with strategies centered on rental return and capital growth, excluding leverage use.
6. Unique Offerings and Market Positioning 🏠
- Maintain a cash reserve of 15-20% for daily operations to manage liquidity effectively.
- Offer an unlisted, illiquid property asset that allows trading and redemption within 2-4 days, making it accessible for young people entering the property market.
- Increased property holdings from 8 to 13 under new management, with a goal to expand to 60-70 properties.
- Implemented strategic marketing to increase awareness of unique property investment opportunities.
- Cleaned up non-performing Asian businesses and managed cash flow effectively to avoid raising funds at low share prices.
- Improved business performance leading to high net-worth individuals and retail investors taking notice, with $1.7 billion under management and 318,000 active customers.
- Executed over 100,000 trades for Australian customers daily, with $60 million in dividends paid last year.
- Focus on increasing average customer account balances and number of active customers to boost revenue.
- Developed a comprehensive product suite to support customer financial journeys from early to later life stages.