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Could Crypto Robo-Advisors Bring on The Next Bull Run?
Making smart crypto investing products is a challenge. But offering consumers the ability to invest in crypto on auto-pilot might change everything.
Welcome to the special Thursday edition of Market Mix.
I’ve gotten a lot of positive feedback from doing company and product spotlights, so that’s what we’ll be doing this week. If you have any suggestions for other apps you think I should do a walk-through on, reply to this email and let me know.
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Investing as a consumer category is in flux. Millennials in particular are spending significantly more time learning and taking part in investing. During the pandemic, millennials accounted for nearly 20% of the stock market’s activity (up from 10% in 2019), according to a study from Finimize. The same study found that 24% of Millennial investors are allocating funds into cryptocurrencies.
Why is this important?
Well, it’s widely expected that millennials will inherit an estimated $30 Trillion in wealth over the next few decades, making their investing habits increasingly important for all financial markets and related industries.
The overarching consumer demands from millennials, as it applies to investing tech, focus on three general areas:
User Experience: having a good app, responsive customer service, and so on.
Branding: having a trustworthy brand that speaks to young people the way they want to be spoken to
Personalization: products that are customizable based on individual financial situations, investing priorities, and risk tolerances.
This is why the robo-advisory category is so interesting. These tools provide both an advice-based investing tool, but also help make the consumer feel like they’re learning about investing. Here are some high-level facts about this area of the fintech space:
The global robo advisory market size was valued at $4.51 billion in 2019, and is projected to reach $41.07 billion by 2027
8% of US households invest with robo-advisory platforms
In Q1 2020, Vanguard reported a 14% growth in assets and 35% increase in customer numbers for its robo advisory product
71% of the robo consumer market is in the US, expected to hit an AUM of $1trn in value this year
Massive potential here. This is especially true when we revisit a datapoint we discussed above -- that 24% of Millennial investors are allocating funds to cryptocurrencies.
An exciting thing happened today -- Titan officially launched the “first actively-managed crypto portfolio” for US consumers. According to Coindesk, the portfolio “will feature a basket of cryptocurrencies including BTC, ETH, XLM and ADA.” You can get a deeper look at the strategy and asset allocation in their launch deck.
Pretty awesome.
But, wait, what is Titan?
Titan is a robo advisor app that users have compared to being “a hedge fund in their pocket." While it isn’t technically a hedge fund, TechCrunch points out that it’s built like one. Since launching in 2018, the “active investing platform” has acquired 30,000 clients with over $600 million in assets under management. The company also just raised a $58 billion Series B led by a16z.
The Titan platform has four main investment strategies:
Flagship: “large cap U.S. growth strategy, aimed at identifying high-quality companies that can compound capital in excess of the S&P 500 index.”
Opportunities: “focused on identifying smaller U.S. companies that we believe can grow at exceptional rates and become the next crop of shining stars.”
Offshore: “international growth strategy, aimed at identifying the world’s best businesses in emerging and developed markets from China to Latin America and beyond.”
And now, Crypto: “an actively managed portfolio of cryptoassets that we believe are positioned for outstanding long-term returns with minimal correlation to equities and with attractive hedging qualities.”
A cool thing about all of these strategies is that Titan “downside protection” for each of the equities investment strategies, providing the user with the potential to “earn profits when the market declines.”
What’s great about the Titan is that when you deposit money, it’ll provide you with some example allocations based on your onboarding preferences. Want a focus in growth stocks? Great, here’s an aggressive allocation. Want a safe, long-term strategy? Great, we’re going to largely stick to large-caps with small allocations to the risky stuff.
What’s probably my favorite part of the Titan experience is that the app provides you a “scorecard,” which benchmarks their robo’s historical performance against popular indexes, investment advisors, and other Robo-advisory products.
Swinging back to crypto here, the fact that our industry now has a “set it and forget it” investing product should not be under-appreciated.
Let’s consider some of the ubiquitous purchase journey milestones crypto marketers likely come across when selling crypto as an investment. Think of it as a kind-of one-sided conversation with the consumer.
“What is bitcoin?”
“Wait, there are more cryptocurrencies than just bitcoin?”
“Wait, bitcoin is worth how much? I only have $X to invest, I can’t afford one.”
“Oh, okay, I don’t have to buy a whole bitcoin, but I still don’t know which or how much of asset I should buy.”
What is the through-line here?Hint: Education
And when we’re looking at Titan, there’s quite a few boxes that get checked off in addressing those concerns. First, front and center on their website nav bar is their “research” hub. This is their primary content play, but also provides the user with fresh, insightful content that provides insight for how Titan invests their money.
Second, and probably the most important, is that crypto Robo-advisory products can solve not only the first three of those questions above, but also the fourth. Robo-advisors provide a way for the consumer to feel like an active investor, while leaving the day-to-day maintenance of a long-term portfolio in the hands of the professionals.
It’s easy to forget, but investing in crypto is a very intimidating idea for first-timers. But having a tool like Titan Crypto’s robo product is a great way for the rest of us to point to as a positive medium for onboarding the crypto-curious into the space.
If you’re curious about how Titan’s crypto robo strategy works, take a look at the launch prospectus here.
Also, I want to point out that this is not a paid article, and if it was I would prominently disclose it. With that said, if you’re interested in trying Titan out, feel free to use my referral link to get us both a discount on management fees.https://www.titanvest.com/?r=752a160f-6da5-4f06-b81d-4944bd9164bc
Who’s Hiring Marketers in Crypto?
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