kaChing, a Palo Alto, Calif.-based startup backed by Netscape founder Marc Andreessen and Open Table CEO Jeff Jordan, launched a web site today that aims to be a marketplace where anyone can access talented investors. With kaChing, people can choose to invest their money according to the trades of investors featured on the site. It first started out as an application on Facebook, which attracted hundreds of thousands of users who managed mock portfolios.
The startup’s founder, Daniel Carroll, who’s traded stocks since he was 15 years old, said the site provides people with a cheaper and more transparent alternative to putting their money in mutual funds. For example, people can make a minimum investment of $3,000 on the site. Carroll said Fairview Capital, for instance, generally doesn’t take investments less than $1 million, but it does so on kaChing. kaChing investors, who range from amateurs to investment management firms, are assigned an “Investing IQ” score that’s based on similar factors used by Ivy League endowment managers, such as risk adjusted returns and the quality of the rationale behind their trades. Investors who receive a score of 140 or higher are classified as a “Genius,” of which there are currently 12 on the site.
People who want to invest according to the trades of their selected kaChing investors have to pay a management fee to them kaChing, which averages around 1 percent. kaChing takes a 25 percent cut of that fee and gives 75 percent of it back to the investor. Once people set up an account, they can follow their investments in real-time on a dashboard, and the site sends email updates if an investor makes any unexpected moves. The site faces competition from Covestor, which also lets people track investors.
kaChing is a 12-person team. Carroll said it has raised around $3 million from angel investors. And he has big plans for the company, setting his sights on an IPO. “Hopefully, you’ll see our ticker on the New York Stock Exchange” five to ten years down the road, he said.