Philadelphia fintech startup Wolf Financial
Wolf Financial was founded early last year by two Drexel University students and Alpha Epsilon Pi brothers — 20-year-old Michael Warshowsky, now a junior at Drexel, and 22-year-old Ben Kestenbaum, who left the university without graduating. The duo would discuss their portfolios and the stock market on a bench while eating lunch after their computer science lab class. Several of their friends at Drexel started getting more involved with investing but had no experience, so they would consult with Warshowsky and Kestenbaum and ask for their advice.
Wolf Financial, based at Two Commerce Square in Center City, provides an investing platform for retail traders designed to be a hub for trading, research and social collaboration. The startup expects to introduce trading to its platform later this month — launch date pending — that will offer basic buying and selling of stock and fractional shares, with plans to later go into cryptocurrency trading, Warshowsky said.
“What we realized is that investing is fundamentally a social activity for this demographic, and they don't have a safe place to do it,” Warshowsky said. “They don't have good tools at their disposal to do research. And they don't have platforms that are on their side.”
The startup recently closed a pre-seed funding round from angel investors. Warshowsky declined to disclose how much Wolf has raised and the number of users on its platform.
As “social media for investors,” Wolf Financial’s platform has a feed where users can discuss stocks and chat with investors they follow, and the startup will verify financial content creators on the platform that other users can follow. It also allows users to connect their existing stock portfolios that they can share with other users.
“You shouldn't have to take screenshots. You shouldn't have to download the data sets, use Excel to share your research and your insights,” Warshowsky said. “If you want to share what companies are doing, your detailed analysis, insights, questions, anything you might have, you should be able to do that all natively within one platform.”
The startup’s core demographic is newly minted retail traders, particularly millennials and Gen-Z, who are looking beyond the meme stocks.
About 15% of all U.S. stock market investors said they first began investing in 2020, according to a survey from Charles Schwab, and they are younger and make less than those who invested before 2020. The new generation of investors are also optimistic about the state of the stock market, plan to hold for long-term gains and anticipate spending more time managing their portfolios, per the Schwab survey.
Wolf Financial is avoiding the "gamification" of investing like Robinhood, which axed its “confetti” visual for new investors earlier this year after the company was accused of being reckless with young investors.
Warshowsky believes platforms like Robinhood have been valuable to the democratization of stock trading, but that there’s an ethical dilemma when it comes to the gamification of trading.
“When you go and push them and gamify those aspects of it, that are for them to take risks, you're almost taking advantage of them,” he said. “And the question becomes, ‘How long can that be sustainable if this demographic feels like they're consistently being taken advantage of?’”
Unlike Robinhood, which makes money through payment for order flow — where brokerages are paid by market makers for directing trade orders to them — Wolf Financial won’t make any money from the brokerage, Warshowsky said. The startup’s long-term monetization strategy will be based on building tools for retail traders that will likely launch within the next six months, he said.
Wolf Financial also recently hired three new developers, bringing its team to 12, and is developing short-form video and direct messaging capabilities so users of the platform can get in touch with other investors.
While Wolf Financial is currently targeting Gen-Z and millennials, the startup eventually wants to be a tool for the entire retail trading community, Warshowsky said.
