A 2021 Hash App Investors’ Letter.
As I sip on my fresh brewed coffee looking through the window, admiring the beautiful natural scenery and game at Safari Valley, Ghana, a lot run through my mind. I reflect on the journey for Hash App so far; from my summer trip to Kigali, hanging out with Osita, OoTheNigerian in 2018, looking at an African skyline at night-time from the Sky Bar, and thinking about how to reintroduce Africa to the investing world. This was and is still great…, creating a level playground for mankind to invest globally remains the core focus of our project!
We’ve got a bigger problem to solve!
In the new world where folks travel, migrate and traverse borders easily, as visitors, expats or economic migrants, folks often long to extent their impacts; intellectually, socially, economically, and even politically, across borders especially back to their home countries. At Hash App, since our focus was on the Finance and Investments, we quickly realized there were still gaps at the retail level in the global finance and investment space that needed to be filled; how does one continue to easily partake directly and seamlessly in the economic prosperity of ones home country, while traversing the world? How does one partake in the economic prosperity in your new home country or anywhere else in the world easily?
We started by trying to solve Africa’s investing problem and played with an idea of enabling Africans to easily invest globally. We are glad that this has become a ubiquitous offering today amongst investing apps locally. We explored further, then we realized that the African diaspora had similar problems, and started building to solve that, then we quickly figured out that the global immigrant population had an even larger but similar problem. Oh wait a minute, this was more of an unidentified global problem waiting for someone to solve it. Ah ha, we’ve got a billion dollar problem!
Our Interswitched journey to Stripe.
Sometime in 2019, we pitched Hash App as we knew it then to a group of Angel Investors. Hash App was going to grant Africans the opportunity to invest in the rest of the world, especially the developed world. We have since made several iterations from what our original intentions were, and as a made these pivots, we realize we were solving a much more bigger problem with a larger market opportunity. We found a white space; the ability for any retail investor living in the West to invest both locally in their domestic markets, and globally, especially in Emerging Markets.
Hash App is a simple brokerage app that lets retail investors in the US, Canada, UK, Rest of Europe, Australia and Japan trade and invest in both their Local and Emerging Markets’ stocks, bonds and mutual funds — think Robinhood to invest both locally and globally in emerging markets.
Why these iterations eh, just launch guys!
We have heard this so many times, and we appreciate these voices always, from within and outside the local tech ecosystem, but there’s more to the surface than meets the eyes. For one, building a Heavy MVP takes time and building a unique product comes with its own learning curve. You do not just write codes and build a landing page, then go live in one month, like most of the Lean MVPs. I think the team is smart enough to know we are in for a different ball game.
We looked at Interswitch, a Fintech Start-Up founded about 20 years ago, which simplifies payments, and is run by some of the most brilliant folks in the world. Then, we looked at Stripe founded about 10 years ago, probably doing the exact same thing Interswitch set out to do, equally run by smart folks. Two great successful Fintech Start-Ups in the world, one major difference however, Interswitch is presently valued at about $1Billion while Stripe is seeking a valuation of about $100Billion and may IPO in 2021, at 100x the size of Interswitch. Why, what happened to these two great success stories?
The size of the market really matters as explained by several folks included Dr Brown. There are things you can control and there are others out of your control. In core investing, idiosyncratic risk is the risk associated with a specific project, while market risk is the risk associated with your entire market. You can diversify off the idiosyncratic risk, but can not do much about the market risk. Interswitch operates in a market where there have been very few tech Unicorns, Stripe on the other hand, operates in a market where several Unicorns are minted regularly on a monthly basis. The GDP per capital in the market Interswitch operates is $2,028, while that for Stripe is $62,795. We can simply see why both similar companies have achieved different degrees of success in terms of valuation.
We were faced with the choice between two coin tosses, the first set says “heads, you win $200 Million, tails, you lose all your money” and the second “heads, you win $5 Billion, tails, you lose all your money”. My guess is that every rational human would go for the second coin toss, even maybe when the odds of achieving a $200 Million in the first coin toss is even higher. In reality though, the odds of even achieving $200 Million is lower in this specific case for Hash App.
Hash App on first iteration would at best been a $200 Million company if we succeeded in 7 to 10 years. Hash App as we know it now, could become a $5+ Billion company after 7 to 10 years. We practically could achieve these two goals with the same entrepreneurship, mental and physical energies, spend the same calendar time frame to achieve both feet, while putting in the same amount of work hours per day, if not even more for the $200 Million target. Simply put, the same level of effort and time will lead to the different results. Yes, we understand, skills and resource requirements may be different for both options, truth is it takes the same amount of human and entrepreneurship efforts to source for these same scarce skills and resources for both options.
Coming 2 America — The Sequel
The most important value to us is that the core of my last medium post still holds true for Hash App, reintroducing Africa to the global retail investors’ market, but this time, as a sub-set of the entire product offerings available on the App. Emerging Markets need to be reintroduced to the world’s retail investing space, so we are so, so killing three birds with one stone. Michael Seibel, the CEO of YCombinator, spoke specifically about building global products like Hash App at Eko Innovation Africa Art of Technology 2.0
We are very excited about 2021. By May of this year we should have our live prototype for US Users, with eight (8) Emerging Markets plus the US Market listed on the App. By 2022, Canada and the UK will follow, while 2023 we will have the Rest of Europe, Australia and Japan. On the product side, we hope to be more of a Neo Bank Without Borders than an pure play Investing App.
One thing we know that we have got, a great to excellent idea, but ideas are nothing until we match them with great to excellent executions. We have concluded most of our negotiations with partners and enablers and will be ruthlessly focused on execution and integration at speed for 2021. To interact directly with Users and Press, we have to spend most of our market time after launch in the US, and it simply means coming back again, to America :)
On a personal note, we know our goals are lofty, will it be easy, no, it isn’t even easy going for a lesser target than it is building for the greater option. Is it going to be difficult, yes, I tell anyone who cares to listen this has been one the most difficult thing I would have done in my life. Is it impossible? Naah, not at all, impossible has never been and will never be in my vocabulary. To be sincere, I have this very strong feeling that our prospect for success are greater with this much more difficult iteration that the other less difficult and familiar option.
From a team perspective, do we have a stellar A team to deliver on this? Yes! As we move from prototype, to MVP, to Proof of Concept, to early and clear Product-Market Fit, to Growth, one thing that is different on this project, we are building a Heavy MVP and it takes a stellar A team of Engineers, Capital Market experts, Route-To-Market experts, User & Customer Services, Advisors, and Cofounders to deliver on each of the stages of growth for the project.
I am amazed how the world has become even much more smaller. Internet 1.0 was meant to close the world, but today’s internet 4.0 has made it even much more smaller. I looked at how Remote Collaborative tools could easily enable one build for the world from anywhere in the world, and launch for the world from anywhere in the world. Cloud Services, CRM tools, Layers of Financial Infrastructures, Digital Media, AI, Machine Learning, Blockchain, etc, the best time in history of the world to have launched a Start-Up is today!
Show me the money, and I’ll show you the money!
As we speak to Investors both Institutional and Angels, the response we get most is we need to get a prototype and launch. The funniest thing is that building a Heavy MVP is different from building a Lean MVP, especially for a highly regulated industry in the US. Where some of the critical funding is required is in building the Heavy MVP itself. Every Start-Up is unique, and yes, we need the funding to build the Heavy MVP. It took about 18 months, with about $66 Million ($3/$13/$50 Million) raised in three rounds, for one of the most successful retail investing app in the market to commercially launch.
Most investors we meet right now have become Tourist Investors waiting to jump on the project when the first set of hard work must have been done. We cannot blame them, they are rational. Some may not have the risk appetite or experience in the space, may not be subject matter experts or do not have portfolio experience in this space, stage, or even the market. We are highly appreciative of our families, friends, and our Angel Network, Village Seed Ventures, who have practically been with us from scratch.
In 2021, we will be laser-focused on Institutional Investors who have core portfolio expertise in this space, market and specifically at our project stage. We have to be scientific about this process to increase our odds of getting the right funding by talking to the right investors ab initio. The VC funding game in itself is a space that needs to be disrupted through technology, we are glad the folks at New Stack Ventures have built a beta tool to help with this challenge for a start.
We rallied around the team, we said to ourselves, we have a lot of odds against us - I do not need to write about them here, we live in a real world so you can easily figure out what the odds are, but we only have ourselves to pity and blame if we do not get things right. Even though the bar has naturally been set high for us, we have the entire skills, drive, determination and enthusiasm to deliver on this project. Most especially in this hyper-connected global world, we have all the requisite tools within our reach and at our disposal, we just need to work extra hard to deliver on the Hash App project goals.
2021 will be an interest year. We are ready to change the world.
Pinch me, I just woke up in my bed in Lagos, Nigeria!
