Fintech Upvest wants to expand its existing business model and thus tap into a new market. Founder Martin Kassing wants to occupy a very specific niche.
Ride with the taxi competitor Uber and get a few ETF shares in your account as a small kickback, or buy a coffee at the coffee shop chain Starbucks and get the cashback in cryptocurrencies: At first glance, this may sound rather far-fetched - but it fits the vision of a young Berlin-based fintech.
Upvest, as founder Martin Kassing christened the company in 2017, wants to be a company that offers "Investment as a Service" or "Custody as a Service". This means that fintechs, banks or even other companies should be able to offer trading in securities in their apps in the future, but without worrying about the technical and regulatory background.
In the foreground, the end customer, for example Max Müller, sees the design of his own bank, while in the background Upvest handles the trading and safekeeping of the securities. The fintech is thus pushing into a niche that does not yet exist, believes founder Kassing, who has taken the start-up from a one-man operation to one with 35 employees. "Our approach is to offer a simplified API that firms can use to offer investment product custody and brokerage to their clients," Kassing says. The technical term API in this context translates to programming interface.
Upvest got its start in the crypto space in 2017. At the time, founder Kassing, who previously worked in private equity among other areas, was employed by Berlin-based startup Finleap. He was so fascinated by the hype surrounding cryptocurrencies like Bitcoin that he unceremoniously launched his own company, Upvest. "I had always hoped that people would manage to build a fortune on their own. I wanted to contribute to that," the founder says in retrospect. The startup initially launched as a repository for Ethereum supplies from smaller companies, later adding larger startups like Bitwala. Kassing wouldn't reveal if and how much profit the startup is making with it so far.
In the future, Upvest also wants to offer the possibility to store and broker classic securities such as stocks, bonds or even ETFs. The start-up has applied to the financial supervisory authority Bafin for the remaining three of four licenses for this and expects to receive permission in the coming weeks. "In the future, we will be a digital securities trading bank that stores and brokers traditional securities as well as modern assets such as cryptocurrencies or tokenized securities," Kassing explains.
That Upvest is additionally orienting itself in this direction is not unusual. People are again buying more stocks, bonds and investing their savings in exchange-traded funds, so-called ETFs. The sector is now said to be worth a trillion euros in Europe, and demand for securities is also high in Germany. Since January, customers have already had to put up with long waiting times for an account with firms such as neobroker Trade Republic. According to the Berlin-based fintech, there is simply a lack of video agents who can wave so many people through so quickly, even though they already have a solution that will be rolled out soon.
Upvest was already able to convince financiers with its plans and first collected seven million euros from investors such as N26 founder Maximilian Tayenthal, later also the venture capitalist Earlybird invested among others and drove together with old investors the collected sum to twelve million euros. IDNow founder Felix Haas, who also gave money, justified the investment essentially with two points. On the one hand, he said, the field was interesting and founder Kassing understood it well. "Secondly, he is agile, which means he is someone who does not doggedly follow a thesis endlessly blindly, but adjusts left and right," says Haas. "After all, Upvest's model is different from the original one - and that's great," says the investor.
With the expansion of the portfolio, the start-up now wants to further scale its product and for this it needs new customers. Kassing's initial focus is on neobanks, which in turn want to offer their customers their own investment products, then in the next step also banks and finally also apps or companies that do not come from the financial world. Kassing wants to connect one million end customers via the interface by 2023, and one day he even dreams of much more. "I believe the topic of investment as a service has the potential to reach 100 million end customers or more," he says.
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