In a financial world dominated by large institutional investors, hedge funds and fees, Scottsdale-based ClickIPO is harnessing technology to return public offering investment power to everyday people.
The financial tech company, an awardee in the Arizona Commerce Authority’s Spring 2017 Arizona Innovation Challenge, is rebuilding connections between individuals, known as “retail” investors, and initial public offerings (IPOs) through a smartphone app soon available to everyone.
As the app enters its beta testing phase and grows closer to its public launch, ClickIPO CEO Scott Coyle highlights why IPOs need the first-of-its-kind app, why the back-end technology is so vital to its success and why the company chose Arizona as a place to build and grow.
The seeds for ClickIPO were planted in the financial industry’s reaction to the NASDAQ crash of the early 2000s, also known as burst of the dotcom bubble. The meltdown vaporized nearly $1 trillion from the NASDAQ, wiping out numerous retail investors along with larger players.
Subsequent lawsuits and increased rules and regulations made stock exchanges increase listing requirements. The larger brokerage firms also raised their account minimums.
“There were no more small offerings, there were nothing but larger offerings,” Coyle said. “Big investment banks wouldn’t take small customers, so the small customer has kind of been shut out the last 15 years.”
Enter ClickIPO’s mobile-based IPO and secondary offering app, featuring an order entry platform and a research tool. The bottom line: it gives retail customers the power to once again buy public offerings.
The app already has buy-in from major brokerages because it enables a connection to every broker/dealer while allowing customers to keep their existing brokerage accounts. Underwriters like it because the app provides a large pool of investors vetted by ClickIPO.
“There’s a reason ClickIPO is getting attention from venture capital firms like ours: They are poised to roll out a truly unique mobile app that democratizes IPOs for the everyday investor,” said Geoffrey Mobisson, a co-founder of Arizona-based E&I Ventures, whose funds are focused on tech-based businesses. “They have a smart, savvy leadership team that will leverage the right mix of tech talent in Arizona to help drive long-term growth.”
One major ongoing challenge for Coyle is navigating and integrating the technology underlying the app to bring information on every IPO to its users’ fingertips. The platform also must integrate with clearing firms, online brokerages and underwriters to give all the players the data and the aggregation technology they need to make the system work.
“It’s trying to be a universal adapter to all of this financial industry plumbing,” Coyle said. And that plumbing has been built, updated and added on to over the past 20 years, so it exists in various states from new and modern to old and antiquated. But ClickIPO’s tech team is poised to make it all work together, seamlessly.
“That’s where the bulk of our development efforts continue to be and really where all of the challenge is,” Coyle added.
Like every startup company, ClickIPO considered carefully where to base its operations and where it would have the best chance to continue to grow that success. And like many technology startups, ClickIPO considered Silicon Valley and New York, but ultimately chose Arizona.
Factors such as a low cost of doing business, access to capital funds and the availability of tech talent makes Arizona very attractive to ClickIPO.
“The talent’s here, it’s less competitive and more affordable. Arizona’s a great place to build a company,” Coyle said. “I think the trendline is heading in the right direction.”