SprinkleBit, a startup that helps you invest with guidance from friends and experts, has raised $10 million in new funding from GTC.
It’s not a new idea to tap into the wisdom of the crowd to do better on the stock market, but SprinkleBit offers a unique tool called the Value Prediction Index, or VPI — each stock gets scored based on whether the community thinks its price will increase, and each user gets scored based on how accurately they predict future prices. (The VPI is actually based on CEO Alexander Wallin’s undergraduate research at UCSD.)
While the VPI is maybe the most interesting thing about SprinkleBit’s approach, the startup’s built a full social platform, where users can trade risk-free with SprinkleBucks and follow other users’ trades. Then, if they feel like putting actual money on the line, they can switch to SprinkleBit’s brokerage mode and buy and sell stocks for real. (Wallin said that with the combination of social investing and real trading, his team had to do a lot of work to make sure SprinkleBit is compliant with FINRA regulations.)
There’s also an educational component — the company offers a set of online investing tutorials called SprinkleBit University.
You can use SprinkleBit’s social side for free, but it charges an $8 commission on trades. You can also pay $9.95 a month for SprinkleBit Premium, which cuts the commission to $5 and includes additional data and tools.
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The service was first launched in 2012 and currently has about 10,000 users. Wallin said the company is only getting ready to do a serious marketing push now, because it’s finally ready to “start on-boarding the masses.”
As for how the broader turmoil in the stock market might might affect usage, he said, “I think it’s a good time, because when the market is going well, it’s all about greed, and any platform will make money … Now, when you have to actually know which stocks are going to go up, you need a tool [like this].”
SprinkleBit has raised a total of $13.5 million. It’s also in the process of relocating its headquarters from San Diego to New York City.