LeapRate has learned that social and copy trading platform Collective2 is attempting to raise $5 million to grow its business, in a private placement with accredited investors.
Collective2.com is a U.S. website that connects investors with traders. Collective2 was founded in 2001. It claims to have more than 90,000 registered users, with over $40 million dollars of investor capital connected to the Collective2 platform, and more than $175 million dollars traded daily via the platform.
The company will attempt to raise $5 million dollars by relying on the Jumpstart our Business Startups (“Jobs”) Act exemption to Regulation D, which allows general solicitation of a Private Placement.
Collective2 allows Trade Leaders to sell trading strategies, trading algorithms, and money-management acumen to the public. The company audits trading results for thousands of trading strategies. Regular traders can then compare and shop for trading strategies that meet their criteria (trading style, or asset class), can compare historical performance, and – if they choose – can have those strategies automatically traded in their own brokerage account.
Collective2.com makes money in three ways:
1. Listing Fee. Trade Leaders pay a Listing Fee to have their strategy tracked and offered on Collective2.com.
2. Subscription Fee. Trade Leaders set their own monthly subscription price, which is charged to each subscriber. Collective2 collects the fee from the subscriber and retains a portion of it before remitting the remainder to the Trade Leader.
3. AutoTrade Fee. Collective2 charges a separate fee to allow a strategy to be automated within a brokerage account. The nature of this fee varies, depending on asset class or local regulations. While sometimes the fee is transactional (a fee per trade), or is charged to the broker executing the trade, most often the fee is in the form of a flat monthly license fee charged to a strategy subscriber.
As per above, Collective2 has been around for a while (since 2001). However it is still very much a startup, at least financially. The company has done between $300,000 to $370,000 in Revenues in each of the past few quarters, basically breaking even.