As first published by Forex Magnates, binary options trading technology provider, TechFinancials, is about to become the first firm from the binary options industry to offer its shares to the investing public. On Monday, March 16, the IPO will kick off after initially being planned for today, but was delayed as the company met some difficulties in the process.
The firm’s founders sat down with Forex Magnates to explain TechFinancials’ position as its shares get listed on the London Stock Exchange’s Alternative Investments Market (AIM). We met with Asaf Lahav and Eyal Rosenblum, Co-Founders and Co-CEOs of TechFinancials at the company’s offices in Herzliya to hear from them about the IPO process, new products in development and their plans to take the industry to the next level.
The first thing we wanted to know was the reason the CEOs decided to take the company public. The answer to this, according to them, is strictly to raise funds for further expansion through R&D investments. TechFinancials is aiming at bigger markets and needs cash to finance its expansion on multiple fronts.
One of the most interesting opportunities the company is working on is probably the U.S market for binary options. TechFinancials has developed a set of software solutions that will allow on the one hand, for binary options broker to target American clients in a regulated way based on exchange traded options, and on the other side of the exchange will allow market makers to offer liquidity and write options to the exchange. The company estimates that by 2017 the U.S will be a significant market for the firm.
Another field TechFinancials plans further developing in is with gathered funds, the whole envelope that brokers need to support the business beyond trading. The CEOs see a market inefficiency in the way most brokers are dependent on call centers to generate growth. They plan to expand automation of the whole client acquisition process, including retention, greatly cutting labor costs. The model they are aiming for is the gaming industry where the automated funnel has been taken to an artful level allowing 80% of the industry’s processes to be completely automated.
TechFinancials is also planning on expanding its range of trading products in a way that will totally rebrand it away from its binary option roots. The CEOs want to see the company turned into a simplified financial trading technology developer in a few years, into the vision that was set for the company when it was first founded back in 2009. The company is working on CFDs and some of its brands are already in advanced testing phases of a simplified forex offering. The goal is to offer brokers complete solutions for “trading for the masses,” based on simplified forex, CFDs, as well as binary and exotic options.
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The CEOs are very hopeful about the prospects of the simplified forex solution. They said: “Our forex offering is already doing half a billion in volume while still in Beta mode exposed only to a very limited group of clients, we were shocked it grew so fast. If you build the flow correctly, it is attractive enough to bring over binary clients and in significant volumes. It has only been about a month, so too early to say for sure but in our estimate I would say 100% it increases life time value.”
The TechFinancials’ IPO is also an attempt to strengthen the brand of binary options as a trading method and binary firm as legitimate public companies. The founders had to educate investors during their roadshow about what exactly the term “retail binary options” means and what the difference between a technology company and a broker is.
In doing so, the process did a service to the whole industry and to the next binary firm to follow. If the price of the stock rises in a satisfactory way, it can eventually draw attention to the sector among investors the way Plus500’s IPO did for forex.
It’s already not a secret by now that the roadshow did not go as well as expected.
TechFinancials got initial investments to the tune of $5.3 million when the goal was $10. Causes for limited raise at lower valuation could be related to timing that wasn’t perfect, as it was towards the new year holidays, lack of proper pre-roadshow PR and other activities, as well as the fact that many other companies in the industry, including technology and forex/binary brokers, were also claiming to go public. This likely created a climate where investors did not know who to believe and who to back.
But bottom line, the CEOs hinted that the valuation and stock price are less important to them at this stage, and they are looking beyond the benefits of being a public company – easy access to further R&D funding and other expansion opportunities that once executed will bring the company to its desired positioning within the market.
The full length interview will be released later this week on the Forex Magnates Experts site.