Social network backed by hedge funds wants retail traders to prove they have ‘diamond hands’ by linking their brokerage account to verify transactions

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  • The Commonstock social media platform allows retail investors to verify their transactions.
  • The app, backed by hedge funds, just announced a $ 25 million Series A funding round.
  • The app “kills a lot of scammers who might say they got a 1000% return,” the founder told CNBC.
  • See more stories on the Insider business page.

A social media platform aimed at retail traders and backed by hedge funds wants individual investors who have gathered on Twitter and Reddit to verify their trades and prove their skin in the game when they claim big returns.

The app, called Commonstock, launched last year and announced a $ 25 million Series A funding round on Tuesday from hedge fund lenders including Bill Ackman, Dan Loeb and Stanley Druckenmiller.

Commonstock founder David McDonough told CNBC that with the app, retail traders can see each other’s performance in real time.

On Reddit, where investment forums like Wall Street Bets have millions of members, posts are anonymous. But on Commonstock, users have to link their brokerage accounts to the app to prove their investments.

“The ability for anyone to prove they own Tesla or Peloton as a percentage, and show their skin in the game, eliminates a lot of scammers who might say they had a 1000% return,” McDonough told CNBC in an interview.

The app’s home page looks like the Public trading app, which has a Twitter-like feed. User profiles are not tagged by subscribers, but rather by the total dollar amount invested in all accounts that follow them, aka “subscriber assets”. According to its website, the app “is not a brokerage house, but a social layer in addition to existing brokerage houses helping to create more engaged and informed investors.”

McDonough left his product strategy role at Google to launch Commonstock in 2017, according to his LinkedIn profile. The founder told CNBC that he will eventually consider monetizing the app using a subscription service, advanced features, and data aggregation and anonymization. He added that Commonstock would never sell this data to hedge funds or other third parties.

Retail investors gathering on sites like Reddit and Twitter have made their presence known in the stock market this year, starting with GameStop’s epic share price surge in January and expanding to others. companies like AMC Theaters, among others. Now the markets are preparing for the new horde of investors to stay for the long haul.

“Over the past year, the world has seen a fundamental shift in the way markets work. The information advantage is moving away from Wall Street to Main Street,” a Commonstock spokesperson said in a statement. email to Insider.

“The rise of retail investors will have a profound and positive long-term impact on the company,” McDonough wrote in a Commonstock blog post.

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