What if it was easy to invest in companies based on your sustainability values?
That’s what Goodments, an Australian-based mobile trading app, offered its users. The value proposition attracted more than 12,700 novice investors within three years of its 2017 launch.
It also helped young investors overcome what’s often their biggest challenge: choosing which investment to start with, said Tom Culver, who co-founded Goodments with his wife Emily Taylor.
The company’s average user was 24 years old, with equal gender representation, according to Business News Australia. That made it an appealing acquisition for Douugh, an Australian virtual bank, which acquired Goodments for $1.5 million AUD (about US$1 million) in April 2021. It was an all-equity deal.
Before founding the company, Culver worked as a wealth advisor, while Taylor led strategy for product launches — an ideal combination for launching a trading app.
In the early days, they raised $1.5 million AUD in venture capital, Culver said, and built their customer base by offering investing education tools like Goodments Academy. They also participated in a startup-accelerator program, H2 Ventures, which focuses on innovative technology that sparks societal and economical change.
Their app used “profile modeling and cohort analysis to ‘suggest’ suitable investments,” rated by environmental, social and ethical values, Culver said. Users gained access to sustainable portfolios, exchange-traded funds (ETFs) and fractionalised single stock trading of U.S. securities like Tesla, Nike, Disney and Amazon, according to the company.
With an entry threshold of just $1 and the promise to connect customers to investments within five minutes, Goodments had “an extremely high signup-to-account-creation conversion ratio,” Culver said. But when they “hit the ‘chasm’ and growth started to plateau,” the founder team began to explore selling the company.
Goodments’ technology aligned with buyer’s growth plans
Culver said the winning combination of factors that appealed to the buyer included a unique business proposition, powerful user on-boarding process, and effective data strategy.
“Look to exit when you are in your strongest position, not your weakest,” Culver recommends to other entrepreneurs. At the time of sale, the company included its two founders, plus five employees handling design, marketing and off-shore engineering, he said.
He also suggested building relationships with potential buyers at least a year before starting the acquisition process. “At a minimum, this creates deal competition which will increase your likelihood of closing a deal,” he said.
He knew Douugh’s Founder and CEO Andy Taylor through the FinTech scene for several years before the acquisition, Culver said. “CEOs in the space tend to be well connected.”
Douugh, which was founded in 2004, offers a smart bank account that manages and grows users’ money through tools like Salary Sweeper, automatically setting aside savings each payday.
Taylor told Business News Australia the acquisition would accelerate the virtual bank’s planned Wealth Jars feature. Now live, the feature enables customers to achieve their savings goals by investing money in custom-built portfolios.
Culver joined the management team as head of Douugh Wealth, its wealth advising division. Emily Taylor did not stay with the company post-acquisition.
