It’s April 2022, and meme stock investing is not going well. Crypto prices are crabbing side to side, and defi is confusing, leaving millions of eager investors looking for ways to earn.
Soon, an auto investing startup had an answer using cash flow to invest, and on March 30, the team completed their Y Combinator launch day.
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“We think we figured out a new way to invest that’s never been pioneered before, using cash flow as the primary funding mechanism,” CEO Chirs Lovato said.
Soon, originally pitched as a debit card that would track deposits and spending will launch first as embedded crypto investing option for any bank account.
The idea is to enable users a more liquid way to invest. Instead of timing the market and waiting for a sale to settle, Soon does it all for a user using trading algorithms.
It is also coming soon, open to a thousand members of the early access whitelist. The Salt Lake City-based startup raised a $1 million pre-seed round from local angel investors in Utah in 2021 and $500,000 as a chosen participant in the Winter 2022 Y Combinator Cohort.
Preview: How does Soon work?
Lovato and the team came up with the idea while realizing the difficulties of investing. He was working as a developer and engineer at Adobe and had decided it was time to start doing the “adult thing” and invest his money.
“We all started investing and realize how complicated it is to invest, how much of an emotional roller coaster it can be figuring out what to buy when to sell,” Lovato said. “There’s probably a lot of working professionals out there that are making a lot of money, that are smart but don’t know how to invest.”
When his friends came back to the same conclusion, they realized there had to be a better way. They banded together and tried to find a way to use their decades of combined developer skills, take the emotion and timing problems off the table, Lovato said.
Trading algorithms and randomness
“That’s when we started playing around with many different investment algorithms that would handle all of this for us until we stumbled across one that would use cash flow,” Lovato said. “[at the time] We’re reading this book called antifragile, written by Nassim Taleb, which inspired us to look at randomness and try to tap into that as part of our investment strategy to make it more robust.”
So, they tried to incorporate some randomness of their own, Lovato said, by connecting a bank account to an algorithm that would automatically invest a set percentage of deposits on a set portfolio of securities. When Lovato would make a purchase, the system would automatically sell the security that had performed the best.
“We connected my bank account, we pulled a bunch of transactions and fed it through an algorithm and told it: every single time there’s a deposit, (pretend 30%) gets invested. Every time there’s a spending event, liquidate the highest performing asset to cover the transaction, and do that for the last two years,” Lovato said. “So we ran simulations, and we came back, and our jaws hit the floor, we’re like, holy crap, this is a viable investment strategy.”
Thousands of simulations later, with dozens of accounts from Lovato and other volunteers across all backgrounds and walks of life, the strategy still works.
Crypto in your bank account?
As Aaron Bylund, CMO said, the product aims to make debit deposits work for consumers, not just investors.
“The average interest rate in U.S. checking accounts is .06%; it’s nothing. For most people, the majority of their net worth is flowing through their cash flow account, and it just disappears; it does nothing for them,” Bylund said. “We found a way to take advantage and put that money to work and bring significant value to users.”
It’s not a speculative service, Bylund was quick to say, because there are a lot of speculative services out there.
“We’ve spoken face to face with close to 2000 people over the last several years, and you see the excitement in their eyes when you tell them they don’t have to think about it, they just spend with their card, what they are already doing, they don’t need to learn anything new,” Bylund said. “The message that we’re trying to drive out there to our potential customers: we want to make their life easier and want to give them time back to focus on living their life.”
But first: Crypto
In a blog post this past week after Soon’s demo and launch days, Bylund wrote that things might look a little different around the firm’s website. Along with launching customer onboarding, the team said that the first product launch would be a crypto-embedded SaaS-type deal, with the debit auto investing solution on the way.
“Soon is even better than advertised,” he wrote, “You might notice that things are a little different. Although we continue working toward releasing a debit card, the first Soon product will instead attach to US bank accounts and will feature crypto as the core investment asset.”
The new deal is the same as the last, an auto investment product, randomness, and algorithms, but connected to customers’ bank accounts, with crypto investing, instead of a separate investing account.
“Yep, you read that right. You can bring your spending account and still get the amazing benefits of Soon’s fully automated investing! You won’t need to deal with the stress of timing the market. You don’t need to be an expert,” he wrote. “Soon still follows your spending activities to signal market trades. Just spend regularly, and you can take advantage of any available gains.”
