Pitching trading product to VCs, can't find proper data on how big "trading product market" is

Discussion in 'Educational Resources' started by bearmace, Dec 3, 2017.

  1. bearmace

    bearmace

    Hey guys, I'm pitching a trading related product to a couple VCs but am currently stuck on quantifying an accurate price range of how big the total trading products (products like sierrachart, bookmap, neuroshell, backtesting software etc) market is in the US and around the world. Unlike most industries, for some reason the trading industry doesn't have much clear aggregations of data about total active trader size, platforms, or add-on product market size. As a trader who has been around for a while I have a "feel" for how big it is but feels won't cut it when pitching to some hardened VCs, they demand accurate number ranges. Short of emailing every single trading product vendor out there and asking how many paid customers they have, I can't think of any efficient way to find this info. Does anyone happen to know or have any good ideas on how I could get this info? Any help would be greatly appreciated.



    note: before I get pitchforked by people- it's not an ICO lol
     
  2. fan27

    fan27

    I would also be very interested in those metrics. Here are some stats for the USA.

    "We find that 17 million American households owned a brokerage account in 2013, down from 19 million in 2001. Most households with a brokerage account also owned an Individual Retirement Account (IRA). While some households actively traded through their brokerage account, 65% traded at most three times in the year before the survey interview."

    https://www.dol.gov/sites/default/f...lysis/retirement/brokerageaccountsintheus.pdf

    "Despite the overall number of hedge funds tumbling to 9,925 by the end of September – the first time it has fallen below 10,000 since 2014 – the total amount of funds under management has jumped to a record high of $2.979 trillion dollars as positive performance has more than compensated for net investor outflows in recent months."

    https://www.cnbc.com/2016/12/16/num...launches-fall-to-financial-crisis-levels.html

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    One thing to consider is what is going to be the price point for your product. Anything over a "small" amount and you can exclude most retail players. Based on the first link I provided, let's assume 3% of the 17 million of households owning a brokerage account would be interested in "affordable" trading technology. That is 510,000 prospective customers. I am sure there is a more robust way to come about some meaningful metrics for you.
     
    bearmace likes this.
  3. truetype

    truetype

    Find ex-employees of TradeStation et al on Linkedin. Take them out for a beer and get their sense of the state of the industry. You'll find they aren't bullish on vending to individual active traders. The robots have hollowed out that "industry."
     
    bearmace likes this.
  4. bearmace

    bearmace

    thank you so much for the dol PDF, that's just the kind of solid data I was looking for. Yes, I was thinking of giving steep discounts to retail clients who have smaller accounts (what exactly qualifies as a small account is something I'm researching).
     
  5. bearmace

    bearmace

    <--- robot vendor here :)
     
  6. Again I would go out and listen to the public brokerage firm calls. Schwab's last call show $3.26 trillion in assets -over 10 million accounts and over 50,000 traders they define as active. At Fidelity, TD, and Schwab the gross data includes RIA assets. Not certain how other firms report.
    https://aboutschwab.com/investor-relations
     
    bearmace likes this.
  7. truetype

    truetype

    Very few Fidelty, TD, Schwab clients are active traders who'll pay money for software tools.
     
    Last edited: Dec 4, 2017
    fan27 likes this.
  8. "Very few of Fidelty, TD, Schwab clients are active traders who'll pay money for software tools."

    Then you sell the tool to the firms. They ll use lots of outside tools that they either brand or while label.
     
  9. truetype

    truetype

    Let me know how that works out for you...