Bux, the Amsterdam-based trading app that wants to make investing fun, has picked up an additional $12.5 million in new funding. Venture capital firms Velocity Capital and Holtzbrinck Ventures led the round, which also includes debt financing from Kreos Capital. It brings total funding to $35 million since being founded over five years ago.
The newly raised capital will in part be used to launch “STOCKS,” the company’s planned app for “commission-free” investing. Bux is also disclosing that it has already spent some of the funding on the acquisition of online broker ayondo markets Limited (AML). Ayondo is the back-end provider the startup has been using to power its existing trading app BUX, while the merger arguably puts Bux squarely in the “neo-broker” territory and up against the likes of London-based Freetrade.
“The acquisition of AML marks the first acquisition by BUX since its founding in 2014,” says the Dutch company. “To-date, the partnership with AML has allowed BUX to fully focus on creating an app that removes the complexity from the financial markets and simplifies the trading experience. It has allowed BUX to reach a base of over 2 million users in just over four years across 9 European countries”.
By bringing its brokering in-house, Nick Bortot, CEO and founder of Bux, says it gives the company control over “the full value chain,” including a full brokerage license, back-end technology and operation. This, he believes, will enable Bux to service customers better going forward, and make it much easier to quickly launch new features.
It’s a similar argument made by challenger banks that have built out their own banking stack, and echoes the thinking behind competitor Freetrade’s decision to acquire a broker license very early on.
“We will additionally add 50% to our future revenues, as we will keep servicing other clients of AML,” adds Bortot.
On track to launch this summer is STOCKS, Bux’s commission-free investing app that is quite different to the BUX app that offers a “gamified” trading experience and generates revenue per trade.
“Our current trading app allows users to trade in CFDs on stocks, indices, forex and other financial products for the short term with limited leverage,” explains the Bux CEO. “STOCKS will allow users to invest in companies for the mid to long term and allow them to invest in real shares commission-free [as opposed to CFD trading]. It will offer a unique combination of a simplified investing experience along with a vibrant community where they can follow, learn from fellow investors and explore new investing opportunities. This unique combination will be unlike anything that will be in the market once we are live”.
Meanwhile, Revolut, the fast-growing banking app, is also planning to launch a free trading feature, although Bortot is sceptical about how successful that will be. “At this time Revolut has not yet launched their zero-commission trading service,” he says, [and] we are convinced that brokerage and banking are two completely different animals. It requires different skills, expertise, regulation, etc.
“Therefore, similar to what we have seen in neo banking, we will see the rise of 2 to 3 pan-European neo brokers over the next few years (we anticipate 2 to 3 as a matter of scale across Europe). In order for these mobile brokers to be successful across the whole of Europe, and become true neo brokers, it will be crucial for them to be able to easily adapt their services to other languages, but also to different legal systems, local tax systems, local KYC regulations, etc. Europe is very fragmented and not a one size fits all geography”.
To that end, Bux says its soon-to-launch STOCKS app currently has over 100,000 users on the waitlist. Netherlands and Germany will get access to the new app first, followed by a broader rollout across Europe “in the coming year”.
