Two major investors from Russia and Belarus have just injected $25 million in Capital.com, a trading app that is similar to Robinhood in the US or Trading212 in Europe — but with a specific AI-powered function that provides users with tailored content based on behavioral analysis.
Dubbed ’Smart Feed’ and scheduled for launch next month, this AI function analyzes user activity in real time to provide personalized news feeds, analysis, educational and research materials. “It is like a Facebook thread in the app,” said Viktor Prokopenya in an exchange with East-West Digital News.
A wealthy businessman who shares his life between his native Belarus, London and Cyprus, Prokopenya is a co-investor in Capital.com via his fund VP Capital and took a position on the board as a part of his investment.
Artificial intelligence against overconfidence
According to Prokopenya, Smart Feed is able to “identify common trading biases and behavioral patterns to provide relevant educational content whenever these biases are detected. Thus users can avoid the ‘mental traps’ that humans tend to have while trading, and make more rational investment decisions.”
“Say you purchased an Apple stock, it grew a bit, then you sold it. You did the same three times. You start feeling that you know everything. You put all your money in Snapchat stocks — which unfortunately drop in price and make you lose everything. This is the overconfidence bias, which the Smart Feed technology can detect and address,” according to the businessman.
“The human brain is not made for trading because it is exposed to many behavioral biases. To design the app, the team got inspiration from the latest word in behavioral economics,” claims Prokopenya, citing ‘Thinking, Fast and Slow,’ a best seller by Nobel Prize winner Daniel Kahneman.
“Artificial intelligence can bring value wherever large volumes of well-structured data are available. Finance does have such data, in contrast with many other sectors where the benefits of AI are overhyped. We believe that the best investment banking products of the future will be based on a deep understanding of people’s mind using big data analysis and AI,” Prokopenya tells us.
The Capital.com trading app is intended for all types of investors, from the sophisticated ones to beginners who are not sure about how to navigate the market. There are no transaction fees, but Capital.com already charges leverage fees as one of the potential monetization methods.
$100 million for AI startups
The app was launched yesterday — without the AI feature in its current version. It is available in the App Store and Google Play platforms in the European Union, according to the company, which is based in Cyprus. Capital.com currently operates only under the EU jurisdiction but has plans to expand “soon” to other countries, including the USA.
According to media reports, Capital.com spent no less than $1.5 million to acquire its prestigious domain name.
Founded last year, the company has gathered a team of 100 people from Belarus, the UK, and Cyprus. Among the company’s board members and directors are Alex Grebnev, a former executive at Goldman Sachs and Bank of America, and Said Gutseriev, a member of one the richest Russian families, whose venture arm Larnabel VC contributed to the funding round along with VP Capital.
This is the fourth deal under a $100 million investment program targeting AI startups, which was announced in early 2017 by Larnabel VC and VP Capital. The first investments went to Astro Digital, a California-based startup which develops open APIs for satellite imagery; Banuba, a startup with Belorussian roots developing AR-enabled mobile software development kit; and Dronefence, a Germany-based developer of drone tracking and security systems.
This story has been republished in ReadWrite, a syndication partner of EWDN.
