Home Startups Ocho wants to rethink (and rebrand) personal finance for entrepreneurs • businessroundups.org

Ocho wants to rethink (and rebrand) personal finance for entrepreneurs • businessroundups.org

by Ana Lopez
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When Ankur Nagpal sold Teachable for a quarter of a billion dollars, he felt happy. After that, he quickly felt lost as he tried to navigate the financial systems of a country he was not born in and learn the institutional language often only spoken fluently by the historically wealthy.

It would take a few years of self-employment and later building a venture venture, before Nagpal returned to the moment as one of the early catalysts for his latest startup, Ocho. The company, which is going public today, aims to make it easier for business owners to set up and manage their own 401(k) retirement accounts.

Personal finances are hard – and that’s a story as old and hard to disturb as time. And while Nagpal agrees there’s no “northern star” company that has shown how to address financial literacy at scale, he hopes Ocho’s 10-person team might have a not-so-boring wedge to change that. .

Ocho joins the ranks of fintech companies looking to modernize and truly rebrand the retirement account, away from traditional providers like Charles Schwab or Fidelity, or expensive solutions like lawyers and consultants.

“I started exploring the space and we are realizing that everyone – like Robinhood to Coinbase – is just spending unsustainable amounts of money acquiring customers, but not making any money of their own and constantly needing these big rounds of funding to survive,” said Nagpal. “I actually expect there will be a very rough 6, 12 or 18 months for fintech companies.”

Ocho’s spin on the competition, he thinks, is in its market focus. “There are so many companies out there targeting startup founders and their wealth – a new one is launched literally every month or two, all backed by big name VCs, but no one is focused on the company owner otherwise doing well, but no startup founder or a startup employee,” he said.

Instead, Ocho draws on Nagpal’s background of working with makers when he was building Teachable. Teachable helped creators build revenue streams, Ocho wants to help those same creators invest, harvest and scale their earnings in a smart way.

“At Teachable, we helped these people make money online and now there are many places for creators, freelancers and entrepreneurs to make money online – but how do we help them think about building wealth?” said Nagpal. Ocho’s long-term vision is to offer products in addition to solo 401(k)s that help entrepreneurs build wealth.

Human Interest is one of Ocho’s closest competitors; raised $200 million last year at a $1 billion valuation. Nagpal says Ocho stands out because it focuses more on individuals, freelancers, and creators, rather than Human Interest’s small and medium-sized businesses.

For now, Ocho charges a flat annual fee of $199 to help individuals start their retirement account. It takes about 10 minutes to set up and 48 hours to get final confirmation.

The big challenge for the startup is getting the right solopreneurs who care about their retirement accounts. It is looking for people who have income-generating businesses but do not have full-time employees. If you have a side gig in addition to your full-time job, you can create a 401(k) just for the side hustle, but you can’t put full-time income into the retirement account.

ocho interface fintech

Image Credits: Ocho

Nagpal thinks he can bring about early adoption through smart educational materials and outreach, citing personal finance trends on TikTok as an example of consumer demand for more information. He says 40% of Ocho’s workforce is engaged in marketing or education, and the balance is maintained even as the company scales.

If education is so important to getting Ocho to work, one wonders why it is launching with a fintech product. The answer is simple: deadlines. Users must create a retirement account before December 31, 2022 if they want one before 2023 – which puts the fintech in a relevant, but time-pressed position.

Nagpal is unconcerned about the seasonality of the 401(k) product because of the forthcoming product roadmap, which includes the education product, investment flows into the retirement product such as being able to invest in startups and ETFs, and even HSAs, often described as a 401(k) ) for healthcare.

To bolster that ambitious product offering, Ocho has raised $2.5 million from Nagpal’s own venture, Vibe Capital. The entrepreneur says he raised the $60 million debut fund for Vibe Capital with the idea that he would grow one or two startups out of the company, which became reality today now that it owns 20% of Ocho.

Nagpal admitted that the idea of ​​a founder using his own business to launch his own startup seems like the “mother of all conflicts of interest,” but reasoned it was anything but. He emailed all the LPs in his fund about the investment, got a unanimous yes, and ended up with a much lower price for the startup than if they had gone on the fair market. It is still uncommon to see founders sell a company, start a venture firm, and then use that same venture firm to start their next business.

Perhaps the unique connection between Nagpal’s first company, his company, and his latest startup can be a clue to his approach to personal finance: diversify across multiple vehicles, redefine what a supercharged investment could look like, and keep learning.

Ocho team

Ocho’s starting team.

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