“There are 200 million new investors in the United States as of May of last year,” Newchip co-founder and CTO Travis Brodeen reminded the FinovateSpring audience at this year’s conference in San Jose. “They want to change the world. And we want to help them do it,”
Brodeen was speaking of Title III of the JOBS Act, which enables startups to pursue equity crowdfunding with non-accredited investors, bringing a new community of investors to the equity crowdfunding revolution. And while startups and small busnesses have been quick to adopt equity crowdfunding as a new way to raise capital (Brodeen pointed out earlier in the demo that many of these investments are often oversubscribed), encouraging millennial investors to get in the equity crowdfunding game – even with Title III – can be a challenge.
For Newchip, the key to a millennial investor’s heart – and their investable capital – is through their priorities and values. Just as Peter Lynch encouraged investors a generation ago to invest in the companies that built the products they saw and used every day, Newchip gives millennial investors the ability to align their values as millennials with their goals as investors.
Pictured: Newchip CTO and co-founder Travis Brodeen demonstrating Newchip’s DealMatch learning algorithm and new lending model at FinovateSpring 2017.
In Newchip’s debut Finovate appearance at FinovateSpring in San Jose earlier this year, Brodeen and Director of Operations Linda Phan demonstrated how the Newchip app enabled investors to fund the kind of companies and projects that reflected their interests, preferences, and values. Currently in beta, with an anticipated launch over the summer of 2017, Newchip’s solution uses machine learning to take advantage of trends toward social and more personalized investing that Millennials have embraced. “Millennials are voting with their dollars in things that they believe in, things that change the world,” Brodeen explained. “None of the applications out there are targeting this audience. They are all targeting the accredited investor.”
After the user enters some basic information such as net worth and preferred industries for investment, Newchip begins monitoring and learning how the user interacts with the different opportunities available on the app. The solution, which uses a Tinder-like swipe interface, notes which deals are liked, skipped over, as well as which deals are shared with friends and how widely. The investment opportunities themselves are arranged in sortable categories like investment type, industry type and rating, and most funded. Users can invest in their preferred deals through Newchip’s partner platforms or via its budgeted investment plans. Portfolios can be tracked and managed through the app, as well, and Newchip’s Crowdscore feature enables investors to rate deals based on criteria such as risk, ROI, business plan and social impact.
Platforms like Newchip are a boon for startups, creating what Brodeen called “hyper market validation.” He describes the phenomenon as “the idea that a company can list itself and determine right away (if) they have the marketing message to engage with that target market.” In this, the goal is not just to create more opportunities for millennial investors, but also to build better small businesses. “A well-funded, well-capitalized company with a great idea is very likely to succeed in this round,” Brodeen said. “They are going to execute on their plan, it’s certified by FINRA or the SEC and now we have a higher class of startups we’re dealing with.”
- Founded in 2016
- Headquartered in Austin, Texas
- Raised $300,000 in funding
- Re-invests 10% of profits to fund entrepreneurs in developing countries
- Has thousands of early signups and 10k+ email list
- Ryan Rafols is founder and CEO
We talked with the Newchip team at FinovateSpring 2017 in San Jose, and followed up with a few questions for co-founder and CTO Travis Brodeen by e-mail. Here are his responses.
Finovate: What problem does your technology solve?
Travis Brodeen: Newchip has developed a marketplace that connects crowdfunding startups with new investors. We’re often referred to as the Kayak of investing. The equity crowdfunding market is an emerging market and growing rapidly and due to the nature of the industry we’re seeing the platforms (or dealmakers) popping up all over the country. The biggest challenge as an investor is sorting through all the platforms to locate the startup that’s right for you. Newchip makes that easy. When you create an account, we import your social profile and combine it with our machine learning algorithm. Our system then displays every deal available to you sorted by what you’re most likely to be interested in as an individual.
Finovate: Who are your primary customers?
Brodeen: We’ve strategically focused on the millennial demographic, who are new to investing but highly interested in helping support companies that make the world a better place.
Finovate: How does Newchip solve the problem better?
Brodeen: We’re combining the power of crowdfunding with the passion of the millennial generation, which is a historically underserved market with a pent-up demand to work together to change the world. Our SmartMatch algorithm makes it extremely easy to find interesting companies to invest in, matched directly to your personal preferences. Also we’re the only company in the U.S. with a custom-developed mobile app to interact with these opportunities. We make investing fun, exciting, and social.
Finovate: What in your background gave you the confidence to tackle this challenge?
Brodeen: I’ve been directly involved in solving the millennial challenge for over five years, years before many companies even heard of the term. Combined with a 20-year career in large-scale startup companies and also working with over 100 Fortune 500 companies over my career, I have a very unique set of experiences that all combined well into exactly what Newchip is becoming.
Finovate: What are some upcoming initiatives from Newchip that we can look forward to over the next few months?
Brodeen: We’ve exclusively launched on the iOS platform but will be quickly expanding to Android and then desktop. We’ll also be creating in-person investing events and connecting the application with real time experiences with companies who are raising capital.
Finovate: Where do you see Newchip a year or two from now?
Brodeen: We’re working to become a secondary market for private equity and a social impact community where new investors can join forces to support the companies they believe in.