Sprout formally launched its beta to provide the Latin American market with the tools to start investing and build sound financial habits.
As part of the development, Benzinga chatted with Sprout co-founder Ruben Guerrero on his intent to democratize investing for underserved communities.
About Sprout: Founded in 2021, Sprout is making investing in the U.S. markets accessible and fair for Latin American investors.
In the simplest way possible: Sprout is Latin America’s first investing social network.
“We’re building Public.com for Latin America,” said Guerrero, a fintech veteran who, after spending a few years in investment banking at Goldman Sachs Group Inc GS, built financial products for the retail investment market at E*Trade Financial.
The latter experience opened up his eyes to the inequalities that exist; the broader retail investing community lacks access to the fast-paced, actionable market intelligence to which large institutions are privy.
Later, Guerrero's time at Xerpa, a firm that uses technology to simplify and modernize HR processes, brought him to Brazil, a market ripe for disruption.
When looking for answers to why such a small portion of the population invests, Guerrero said he discovered a strong distrust for the government.
In short, citizens fear they may wake up to their assets being seized.
Still, change was happening; “We no longer have 400,000 accounts, we have 4 million accounts. That, still, only represents about 2% of the population,” a result of disparities in access and education.
The Core Sprout Product: “We’re a community-led investment platform.”
The launch of Sprout comes as trends suggest investors more so trust themselves and their embedded networks like TikTok, Reddit and Twitter.
“If we look at the investors coming into the market, they’re between the ages of 18 to 35,” the co-founder said in a discussion on Sprout’s education initiatives. “A third of investors that are coming to the market are relying on social media.”
To put it simply, investors are looking to their peer groups — friends and family — when it comes to monetary issues. That can be problematic given the presence of misinformation.
“You’ve got a lot of charlatans pushing things that people really shouldn’t be consuming. We wanted to build a better community,” Guerrero told Benzinga.
Trade With As Little As $1: So, Sprout comes as a merger between investing and social media. The firm cuts out the jargon and brings social trading to an environment free from the gamification of competitors like Robinhood, Guerrero said.
Users don’t even have to have an account to contribute or derive value from the platform.
“It’s very easy for someone sitting in Brazil to open an account in the U.S., in a matter of minutes,” he said in reference to the international capabilities the platform’s backend, Alpaca, offers.
“We allow them to fund accounts and start trading fractionally with as little as $1.”
Users can interact with each other over in-app content submitted by content contributors and influencers, as well as share trade ideas and check on the latest news.
Recent Events: Sprout raised a $5.7 million seed round led by Y Combinator, Public.com, Sound Ventures, among others.
The funds will be instrumental in driving product development, Guerrero said.
“The capital will be allocated to a couple of main areas such as hiring key players on our team and building technology.”
Thus far, Sprout’s team has grown to 17. In a year’s time, that number will likely double as the firm launches across the Latin American region.
Innovation Outlook: Sprout is filling a gap, allowing underserved investors access and education.
According to Guerrero, the response has been excellent and the firm is looking to become a U.S. and Brazilian broker-dealer; “It is not the easiest thing to do but it is the right thing to do because it allows us maximum flexibility.”
Additionally, the firm will increase its physical presence with offices in Colombia.
“Investing is the gap in the market today, especially for Latin Americans. Once they have dollars in the U.S., then how do we build additional services to support them and become their parallel banking system? That’s what we’re optimizing for.”
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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