Our Investment in Trade Republic: Investing in Smart Investing
Accel’s global approach to investing means that we’re used to literally going the extra mile to find and back iconic companies. In the case of Trade Republic it was quite a few extra miles, including several attempts to meet founders Thomas, Christian and Marco, a few months of getting to know each other, and a short trip that turned into an unplanned two-week immersion in their business (and life) between San Francisco, London and Berlin. Over this period, we grew increasingly excited about the opportunity Trade Republic was pursuing, and ever more confident about the team's ability to realize their vision. We are delighted to welcome them to the Accel family!
Trade Republic is a simple idea being executed brilliantly: it is continental Europe’s first commission-free broker. We believe that this is going to be transformational for personal financial management across Europe. While US households invest almost 40% of their financial capital in shares and equities, less than 20% of German, French, Italian, and Spanish consumer savings are invested in the stock market. An absence of modern solutions for investing, no tax incentives such as ISAs in the UK and 401(k)s in the US and a historical preference for saving accounts and bonds have led to many European consumers investing sub-optimally, at near-zero (and sometimes negative) interest rates.
Trade Republic is playing a leading role in changing the European savings culture by lowering several of the barriers that previously discouraged private investors. The first is accessibility: while legacy investment platforms are often complex and targeted at experienced traders, Trade Republic offers a neobank-style mobile experience. This begins with quick but secure registration in as little as 10 minutes and continues with a simple interface that allows users to focus on trading and managing their assets across a curated selection of 8,000 products, principally global stocks and exchange-traded funds. The second is cost. There are no trading or platform fees, with the only cost to the customer being a €1 settlement fee on each trade.
This consumer-centric experience has been an immediate hit. After launching in the German market in May 2019, Trade Republic now has over 150,000 active users, who have trusted Trade Republic with almost €1 billion of assets. These users span a wide distribution of age-groups and include both novice and experienced investors, with the median investor managing a few thousand euros on the platform and some investing millions a month. The company has opened its waitlist in Austria and will soon expand to other European countries.
Trade Republic’s deeply thoughtful technology and user experience focused approach is the product of a founding team that brings expertise spanning investment banking (Christian), technology (Thomas), and mobile app design (Marco). It also reflects the guts, grit, and long-term view that are needed to transform a big idea into a powerful reality. In their earliest days, the Trade Republic team decided that in order to revolutionize European investing, they needed to build their own state-of-the-art technology stack from the ground up and apply for a full banking license, a process that took over 18 months. The whole time, the founding team never forgot their guiding principle, which is in the company name -- that they were building a res publica, a place for the people. Today, their novel approach allows them to deliver a uniquely low-cost solution and pass those savings onto the consumers they serve. As the customer reaction has demonstrated, the quality of the product has justified all of that thoughtful planning and execution.
And there is still so much further to go. As well as growing in their home market and rolling out across other major European markets, there are opportunities around providing better financial education and information, helping customers to make better investment decisions and ultimately achieve their long-term financial goals. Trade Republic seeks not just to empower more people to become investors, but to make investors smarter in how they manage their money.
Trade Republic stands alongside recent Accel investments such as Monzo and Luko as outstanding consumer fintech businesses that can both enhance and grow their markets. It also contains a mission of real importance: to make investing smarter and bring much-needed change to European savings culture. Christian, Thomas and Marco have put all the foundations in place to create an exceptional, international growth story. We’re truly excited to be alongside them as the next chapters unfold. If you’d like to join us on this journey, Trade Republic is hiring.
-- Luca and Cherry