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eToro - Currently the world's largest social investment network

eToro - Currently the world's largest social investment network

eToro - Currently the world's largest social investment network

eToro - Currently the world's largest social investment network

  It is a cold Monday winter morning in the Netherlands and Noa Strijbos has gone out to the stables to tend to her horses. She is one of the world’s most popular horse trainers, but her 27,000 followers are not interested in her love of horses.1 On the social investment network, eToro, Noa has transformed herself from an amateur observer of the financial markets to a professional trader in just three years. Her global following is waiting to see what her next investment moves are on the world’s financial markets. After all, in 2015 her investment portfolio has already risen by 25%.

I am Yoni Assia, the founder and CEO of the world’s largest social investment network. As a child growing up in the 80s, I was constantly surrounded by innovation. My father, David, established the technology company, Magic Software, which in 1991 became the first Israeli software company to list on NASDAQ. Surrounded by this technological revolution, I was inspired to start coding aged 14, hoping one day to play a significant role in the next stage of innovation. Like many teenagers, I began to work at weekends, collecting small amounts of change to put in my piggy bank. As a result, I wanted to put this money to good use. Feeling uninspired by seeing my hard-earned cash just sit there on the shelf and equally uninspired by the local banks, I decided that I would take control of managing my own money.

It was the 90s, tech was booming and the bulls were on the charge – both in the NBA and in financial markets. Men in suits, in their fast cars, working in big enclosed office buildings were trading on the world’s markets with a great deal of success. With my tech experience, as well as my aptitude for numbers, I decided to give trading a go from the comfort of my own bedroom. Why could I not join those on Wall Street and be connected myself to the world’s financial markets? Unfortunately trading was not as simple as I initially envisaged. From a practical point of view, it was all rather inconvenient and laborious. In order to get started I needed to purchase a few extra screens for my desktop computer. Once I was setIn the end, though, we both agreed that this really was no laughing matter. We understood quickly that global markets and economies were connected to one another, yet somehow 99% of the world was disconnected and disengaged from this ecosystem. With the emergence of technology and social connectivity globally, we realized the power was shifting to the disconnected 99%. Once equipped with the right tools and infrastructure, the masses could not only influence financial markets, but could take control of their own investment decisions. This vision and realization led to the establishment of eToro in 2006. 

Building the Network

In 2006 our founders, Ronen Assia, David Ring, and myself, decided to try and solve the problems that I had encountered whilst trying to trade online. We attempted to tackle the complicated, lonesome experience of online trading and create an online trading platform that was simple and enjoyable. Why should finance be boring?

Initially our platform was designed as a financial challenge, with traders competing against one another in the global markets. Rather than competing against one another, it would be better for our users to learn from one another and we decided to revolutionize trading by allowing traders to see each other’s performance and portfolios. With the world in recession after 2008, we understood there was a demand for financial transparency and the masses had lost faith in traditional financial institutions. Against the background of increasing global debt levels, the credit crunch, and Bernie Madoff, by seeing what other traders were doing, we were adding a layer of transparency within the financial ecosystem that had never previously existed. We decided to make finance social.

Scaling the Network

In 2010 we established the world’s first social investment network, the eToro OpenBook, where members of our online community were able to follow one another. This built not only a network of traders, but a smart crowd curating financial news and investments within personal news feeds. Traders were now able to consume financial news on their personalized feed, and in response trade according to this information, promoting their investment decisions to millions of people on other social networks. Financial products were now in reach of the mass market, not just the chosen few. The secrets of successful traders were no longer concealed from public view, but rather out in the open, being scrutinized or being copied, depending upon your own interpretation.

The ability to copy the traders on the eToro OpenBook not only allows members of our community to mimic other trading strategies, it enables investors to build people-based portfolios, creating a financial asset class of their own.2 As well as bringing forth greater levels of responsibility and accountability, social trading generally outperforms independent trading, according to data analysed by MIT Media Lab. The movement of money in and out of these people-based portfolios is being done at the discretion of the investors on the network, creating a frictionless form of asset management. Almost anyone can open an account on the network, of any net worth, creating their own diversified portfolio. We have dramatically lowered the barriers to entry for anyone wishing to invest and manage their own funds, creating a network scalable in reach to millions, giving traders access to the financial markets that they had never had before. Since we launched our social investment network, we have not turned back.

The success in establishing and scaling our community was born out of a deep understanding of global technological trends. We examined the social revolution and, rather than believing that this was a fad, as many did, we quickly understood that this was the future of all forms of finance. By transitioning our platform to how the world was evolving, we became an early adopter and first mover in this space. This also enabled us to further embrace our vision of opening up the global markets for everyone to invest in a simple and transparent manner.

Breaking the Banks

Being copied and followed can be a lucrative business for our most popular traders. Our Popular Investor Program allows traders to receive 2% of the assets traders on the platform are now building their own profitable fund-of-funds. Today they are passively managing. This is the future of money management, a sector well known for its exclusivity, expense, smoke-screens, and mirrors. Many of the (June 2020), eToro’s network includes  13 million registered users in 170 countries.

Hundreds of financial instruments can be traded on eToro and our investors can copy, follow, and interact with one another in virtually any language, all over the world. As of today, we have raised a total of $300 million of investment. Our most recent investment round “D” included significant funding from five major global
financial institutions, PingAn from China, Sberbank from Russia, and Commerzbank From Germany – eToro being the latter’s first ever FinTech investment. 
The convergence of a FinTech company such as eToro and leading financial institutions demonstrates the force behind our disruption of the old world of finance.
For years, only the privileged few had access to the kind of information and the investment that gave them the power to move markets. The financial system is being significantly disrupted. What was once the exclusive domain of those men in suits down in Wall Street and the City is now more accessible to anyone, anytime, anywhere.

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