The revolutionary social trading app that connects the world’s brokers and their clients.
Business overview
| Location | London, United Kingdom |
|---|---|
| Social media | |
| Website | pelicantrading.io |
| Sectors | Finance & Payments Digital Mixed B2B/B2C |
| Company number | 9437275 |
| Incorporation date | 12 Feb 2015 |
Investment summary
Idea
Introduction
Financial trading is tough. The FCA revealed that over 80% of traders lose money. This is no small issue given there are 13.9m online traders globally. Typically, retail traders trade alone which can lead to poor decision making. Pelican solves this by integrating execution with communication. Think IG meets WhatsApp.
Data now shows that the average percentage of profitable CFD traders on social trading platforms is around 33%, which is around 10% higher than with traditional brokers. Brokers now recognise that social trading improves clients’ profitability. As far as we are aware, Pelican is the only FCA-Regulated social trading app built to allow multiple brokers to connect their clients to a central network. Pelican’s social DNA and unique features are why brokers from around the world are now interested in partnerships. Initial partners include the world’s number 1 CFD and spreadbetting platform; IG. CFD trading is the start. We believe that the benefits of trading socially also apply for shares and sports betting. These huge markets are planned in 2019.
Intended impact
The founders believed that a Bloomberg equivalent for the retail trader would improve decision making and therefore ultimately profitability. Pelican’s unique design allows traders to discuss ideas, develop strategies, share, execute, copy or oppose trades and see who are the best. All these interactions occur on just one platform, like professional traders and institutions experience on their Bloomberg terminals.
Our data since launch has shown their hypothesis to be correct.
Now, domestic and international CFD brokers are seeking to partner with Pelican because new regulations are forcing them to look after their clients better. For hundreds of brokers around the world, Pelican currently is the only option to provide a FCA regulated social trading solution for their clients.
Imagine a world where you could connect your broker account to a central social trading network. Welcome to the world of Pelican.
Substantial accomplishments to date
Monetisation strategy
Pelican currently has multiple revenue streams:
☻ Pelican earns rebates from clients trading on the Pelican platform; and
☻ Pelican is paid a percentage of the subscription revenue generated by users paying to follow mentors and good traders.
Over the summer the European regulator (ESMA) placed certain restrictions on the CFD industry, one of which was to make brokers publish the percentage of profitable traders on their platform. Social trading platforms are shown to have circa 10% more profitable traders in total than traditional brokers (33% vs. 23%). We are now forming partnerships with brokers from around the world to connect their clients into the Pelican network.
This new “multi-broker” approach (B2B) opens up the following exciting additional revenue streams for Pelican:
☻ Brokers pay a set-up fee.
☻ Brokers pay a monthly service fee.
☻ Rebates on copied trades within the platform.
☻ Rebates on new clients introduced to the broker from within Pelican’s network.
Use of proceeds
The main purpose of this funding round is to accelerate our B2B broker connections, whilst developing further our B2C offering. The majority of funds raised will be spent on technology development and implementation.
B2C
We are working with our broker partners, enhancing and adding new features for the benefit of both direct and indirect clients.
B2B
We will be working on making the integration of new brokers as seamless as possible. We intend to add new asset classes, such as shares and crypto-currencies, as well as a sports betting platform in 2019.
We wish to add Institutional Sales to manage inbound interest from brokers and also find new partners overseas. Management believes that broker demand will likely accelerate as Pelican secures its position as a central network. We will also look to recruit for social media and PR. Broker partners have indicated that they will be running Pelican launch campaigns. We need the necessary in-house expertise to coordinate these.
Market
Target market
Pelican is targeting traders and investors who are using traditional brokers. Pelican was built initially to target the Spread Betting and CFD trading industry, with over 13.9 million online traders globally. The household names in this industry are IG, CMC and Plus500, with a combined value of over £4.5 Billion. Pelican can target CFD traders in multiple countries either directly (B2C) or indirectly (B2B) via these partnerships. We feel that brokers also see Pelican as a potential tool to reawaken dormant accounts.
The CFD industry is our first target, but Pelican plans to integrate share trading and sports betting as these markets have hundreds of millions of participants around the world.
The typical user in the UK would be a male aged between 25 and 45. He is likely to work in a professional capacity, in industries such as medicine, IT, legal or accounting.
Characteristics of target market
The market for Spread Betting, which is essentially the same as CFD trading, started in 1974 in the UK when IG was launched to allow people to speculate on the price of gold. Now people can use CFDs to speculate on a wide range of products from Apple to Bitcoin, from GBP/USD to Brent Crude. Now there are some 13.9 million online traders around the world. There are well-established markets in the UK, parts of Europe, Japan and Australia. There has also been growth in recent years in Asia. Pelican can leverage from its broker partnerships to target these international markets, as multiple languages will be available within the app shortly.
The fundamental problem for the industry is that the majority of CFD traders are not profitable. Too many of their customers trade poorly and make mistakes; mistakes which the social trading platforms have been shown to reduce. We believe that Pelican’s social DNA helps these traders make better informed trading decisions.
Marketing strategy
We shall attract new customers via both B2C and B2B models.
B2C
Pelican will invest in social media and PR to acquire new clients, whilst continuing to work with mentors to bring in their followers.
As Pelican is a social network, we shall optimise for our users to bring in their friends, acquaintances, work colleagues or trading club buddies using inbuilt trade sharing and inviting features. We think this virality can greatly reduce our Client Acquisition Cost (CAC). We don’t intend to spend money on traditional direct marketing campaigns.
B2B
Pelican will work with our broker partners to engage with their existing client base. Pelican plans to run campaigns in conjunction with our partners targeting segments of their client base interested in social trading as well as dormant and poorly performing trading accounts. The brokers’ clients should get access to better traders and ideas from all over the world, whilst Pelican has more engagement on its network.
Competition strategy
There are other successful social trading platforms like eToro and Darwinex who are competing against hundreds of traditional CFD brokers. We believe that Pelican is the only platform which has the actual FCA Regulation permitting social trading and is built specifically as multi-broker. A partnership with Pelican provides the umbrella regulation as well as the technological offering to allow any traditional broker to offer a comprehensive social trading solution.
Traditional brokers in the UK could try to replicate Pelican. However, it would take considerable tech resource and time to build and they would also have to obtain our specific regulation. Inbound interest from global brokers suggests that they would currently rather partner with us than build their own social system. Furthermore Pelican is looking to establish itself as a collective network, the size and scale of which we believe would be difficult to replicate by any single broker.
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