Lightyear App: Can This Wise Backed Trading App Fight Its Rivals?

Wise co-founder Taavet Hinrikus says he has never made an investment in a publicly traded company, despite being a prominent angel investor and running one of the UK’s most valuable companies.

However, this morning the Wise chairman claims he changed that with his first trade with Lightyear – a new DIY trading platform in which he is an investor.

His former colleagues Martin Sokk, Wise’s former head of product, and Mihkel Aamer – technical leader – announced plans to launch earlier this summer.

Today it will allow users on the waiting list to trade.

Former Wise employees Mihkel Aamer and Martin Sokk came up with the idea for Lightyear after getting frustrated with existing apps and their high fees

Lightyear is another commission-free stock trading app coming to the market looking to capitalize on the rise of DIY investment platforms.

It arose largely out of Sokk and Aamer’s frustration with the current market, especially the expensive currency conversion fees.

After working to remove some of the barriers associated with sending money abroad at Wise – formerly known as Transferwise – Sokk and Aamer now want to apply the same principles to investing.

“After my career in financial services, I’ve seen the good, the bad and the ugly.

“I believe that retail investing in Europe is still very ‘ugly’,” Sokk said earlier.

“We’re talking sneaky fees, less access, and complicated products that remain the status quo.”

Lightyear users don't have to pay foreign exchange fees up to £3,000 per month

Lightyear users don’t have to pay foreign exchange fees up to £3,000 per month

For Hinrikus, this lack of transparency is exactly what has prevented him from buying stocks in the past.

“Although I have made many private investments, I have never bought a public share in my life.

“Part of it is because it’s never been easy enough for me,” he says.

“When Martin and Mihkel Aamer came in and talked about their plans for Lightyear, I thought to myself, maybe now is the time to start investing in public stocks, so I’m going to do my first trade on Lightyear.”

Like the co-founder of Wise, this new generation of investors is increasingly attracted to major US stocks like Amazon and Tesla, but the currency conversion means they face high costs on already expensive stocks.

Lightyear aims to remove this barrier – by applying the core principles of Wise – by offering its users multi-currency accounts and ‘free’ access to global markets.

Users, it says, will not pay any billing or trading fees and, unlike most competing trading apps, foreign exchange fees. After £3,000 per month, users are required to pay 0.35 percent in FX fees.

‘We are building an investment app with Europe in mind.

“We have so many different currencies and countries in Europe, so having a good solution for FX is incredibly important and something that nobody has done before to invest,” says Sokk.

“Our multi-currency accounts allow people to deposit, hold and invest in multiple currencies, so you don’t have to constantly switch your money back and forth, which incurs additional costs.”

Like its rivals Freetrade, Trading212 and eToro, Lightyear will give users the chance to buy fractional shares – a piece of a share instead of one or more whole individual shares.

This makes it easier for investors to invest in leading stocks with large share prices.

“A high individual stock price should not be a barrier to entry when it comes to building a portfolio.

“We also removed all transaction fees, which encourages people to diversify their portfolios through fractional trading,” adds Sokk.

Early Monzo investor backs Lightyear in $10 million round

Lightyear has clearly responded to the demand for unfettered access to global equities as newer investors look to diversify their portfolios.

More than 5,000 people have signed up for the waiting list it launched just three months ago.

Starting today, users will have the opportunity to trade over 1,000 global stocks.

Due to the buzz surrounding Lightyear and its claim to shake up the European investment market, the team has raised $10 million from some of the industry’s biggest players.

After an initial $1.5 million pre-seed round led by Hinrikus and Teleport co-founder Sten Tamkivi, the Lightyear team has raised an additional $8.5 million.

The round was led by Mosaic Ventures alongside existing investors and a handful of angel investors, including early Monzo financier Eileen Burbidge.

“When it comes to investing in an early stage company, it’s crucial that the team is best-in-class, that I believe in the industry and that the product has global appeal.

“Over the past year and a half, we’ve seen more and more people interested in retail investing, which, when combined with this highly motivated, highly talented and honest team, is something special,” says Burbidge.

“I’m excited about Lightyear’s commitment to transparency and building a platform that is approachable and inclusive, where everyone has the best access, tools and trust to invest.”

The confidence of such seasoned investors will certainly be welcome, but it is still too early for Lightyear.

With plans to expand into Europe next year, Lightyear will struggle to compete with established platforms that have benefited from the pandemic spike.

The age-old question of whether it can make money will also be crucial.

For now, Lightyear is focused on building its customer base, but the founders have said they will be looking at a subscription model for access to more tools, news, and more advanced products.

It says its standard investment account will always remain free.

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