Online Service Helps Investment Clubs Organize

By Lyn Berry, Staff Reporter for The Denver Business Journal

Boulder-based start-up bivio.com has created a suite of free online services that aims to ease the administrative and a communication headaches investment clubs face.

"We're the Quicken of investment clubs," says Ion Yadigaroglu, bivio CEO and co-founder.

Bivio's site, located on the Web at bivio.com, helps investment clubs do their accounting, keep track of their portfolio values, research their stocks and make investment decisions. The site also helps individual investors find others interested in starting a club.

"Our mission is to make everything as easy as possible," said Yadigaroglu. "The easier we make it, the more people are going to want to do group investing."

"I think the site is very user-friendly," said Gayle Freeman, treasurer of a 25-member investment club that uses bivio's service.

As treasurer, Freeman is responsible for all accounting transactions. Using bivio's accounting service, she can enter member's contributions, trades, interest payments and other transactions in a private club site located on bivio's Web page.

The system automatically records stock splits and most dividends through a data feed that tracks the daily performance of all U.S. stocks.

"I really enjoy the daily updates, which show you how your portfolio is doing on a daily basis," she said.

John Kleczewski, systems administrator for the Kane County recorders office in Illinois and an investor in a 10-member group, said he, too, appreciates the accessibility of stock information on bivio's site.

"With all the books online, I can look up and see how the stocks are doing, 24-hours a day," he said.

Kleczerwski said bivio's communication capabilities are particularly helpful. "I like that I can send one e-mail and broadcast information to all the members in the club," he said.

All e-mail sent through bivio is also automatically posted to the group's private message board, where it is archived by topic for quick reference.

Kleczewski said the group approach is the easiest way to learn about investing. "With other people you can draw from different experiences and get a more rounded look at things" he said. "And you only put in bits of money."

Bivio's Yadigaroglu believes the human interaction that group investing facilitates is a much needed element on the Internet. "Everyone loves what the Internet can do, but we have lost the human aspect in the online world," he said. "People want human contact to discuss their investments, share their successes and be comforted when they lose."

He said the Web is the perfect vehicle to bring together like-minded investors. "What the Internet does best is allow people to collaborate," he said.

Online club investing, which is approaching its eight year on the Internet, began with a group called the Pioneer OnLine Investment Club.

Since then investment clubs have enjoyed tremendous growth in the US. The number of clubs that are members of the National Association of Investors Corp. (BetterInvesting), has tripled since 1993 to a total of 730,000 investors in 36,000 clubs. There is approximately $2 billion in investing clubs, according to the NAIC.

"One of our key focuses is to make sure we rapidly get the interest of this existing group of people," Yadigaroglu said. "It's easier to get them on board. It's a simple value proposition: They have been doing (group investing) the hard way. We have an easy way and it's free."

Yadigaroglu plans to seek the attention of existing and new groups through traditional media and online portal sites targeting offices, schools and families, as well as ethnic groups and women. "Sixty-seven percent of current club members are women," he said. He will also pursue the international market, where there are very few investors compared to the U.S..

Although Yadigaroglu said bivio has not yet been profitable, he and cofounder Robert Nagler aren't worried. "We've been spending dollars investing in the company. Our systems require a lot of infrastructure," he said. "We're not interested in trying to make the company profitable in the short term."

Bivio has been supported by angel money since its February 1999 inception. Work is underway to get backing of a top venture capital firm. Yadigaroglu said an IPO is also in the company's future. "We do want to take the company public in a reasonable amount of time," he said.

Bivio, which employs a staff of 10, plans to generate revenues from third party services, such as brokerages, that pay a fee to advertise on the company's Web site, a model used by most Internet companies.

"We plan to work with brokerages to streamline their service for investment clubs," he said. He said brokerages will spend approximately $1 billion in advertising this year.

In the global market, approximately $10 trillion is invested in equity. Yadigaroglu said about $30 billion of that money is spent on brokerage alone. "You don't need to catch a whole lot of that to end up with interesting numbers," he said.

Yadigaroglu is confident the industry will continue to grow, ensuring bivio's success. "We wouldn't have started this venture if we didn't think this was very big," he said.