Miami — By Marcella McCarthy
Today, Sprout, a social network and investment platform that just graduated from Y Combinator’s Summer 21, announced a $5.7 million Seed round. The company, which has offices in São Paulo and Miami and is in invite-only beta, allows those living in Latin America to invest in the U.S. markets via its app. It plans to launch to the public in Q4 of this year.
“It’s a cross between a social network like you’d find on LinkedIn with an investment platform like Robinhood,” said Ruben Guerrero, Sprout’s co-founder and CEO.
Getting your money out of LatAm has been a longtime challenge - and desire - for many in the region because of political instability and the fact that local currencies tend to fluctuate drastically. In addition to being great cities to visit, Miami and New York have traditionally attracted foreign real estate investors as a way to get their money into the American economy, and investing in the markets has also been reserved for those with means and the infrastructure.
Sprout’s concept, which is similar to the U.S.’s Public.com (who is an investor) is that the stock market was built to give the average person a chance to invest in companies, but the barrier to entry has remained high because a certain level of financial literacy is needed. As a result, Sprout aims to educate the public, and one way they’ll do this is through financial content creators and a social network.
Today we see people talking about crypto and NFT investments on Twitter, but once you get a tip there, you have to then go to an investing platform to execute your investment. Sprout is bringing it all to one place.
“If you give someone a platform, but don’t educate them, there’s still a gap and disparity,” said Guerrero. “We want to dispel the belief that you have to be rich to get started,” he added. The company says there are no fees and people can start investing with as little as $1.
If the “financial democratization” and invite-only beta approaches sound familiar, it’s probably because about half of Sprout’s 17 employees are ex-Nubankers, including Guerrero’s co-founder and CTO, Tyler Richie, who was an early Nubank data scientist.
The Miami office will function as the company’s brokerage unit and will serve all of their Latin American-based customers.
In addition to being a former U.S. military police for over eight years, Guerrero was also an analyst at Goldman Sachs, and a manager at E*Trade. Like David Velez, Nubank’s co-founder and CEO, Guerrero was first introduced to Brazil in 2008 when he moved to São Paulo for work. He says it was the in-country experience combined with his financial background that sparked the idea for Sprout.
The pre-launch company doesn’t have a defined revenue model yet, but said it plans to charge a subscription fee in the future, and also have a revenue share model with its creators. The idea is, a creator can get “tipped” for their content, and if the company’s social network side succeeds, the creator can make a worthwhile amount of money that way.
The investors in its Seed round include: Y Combinator, Public.com and Sound Ventures, Liquid2, Geometry Ventures, HOF Capital, Quiet Ventures, First Check Ventures, Investo and The Marathon Lab, among others.