When Ankur Nagpal sold Teachable for a quarter of a billion dollars, he felt lucky. Then, he quickly felt lost trying to navigate the financial systems of a country he was not born in and learn the institutional language often spoken fluently only by the historically wealthy.
It would be a few years of freelancing and building a venture capital firm later, before Nagpal returned to the moment as one of the early catalysts for his new startup, Ocho. The company, launched publicly today, wants to make it easier for business owners to set up and manage their own 401(k) retirement accounts.
Personal finance is tough – and it’s a story as old and difficult to disrupt as time. And while Nagpal agrees that there isn’t a “north star” company that has shown how to tackle financial literacy at scale, he hopes Ocho’s 10-person team can -be a not so boring corner that will change that.
Ocho joins the many fintech companies aiming 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 realize that everyone – like Robinhood to Coinbase – is just spending unsustainable amounts of money to acquire customers, but not making money themselves and continually need these big rounds of funding just to exist,” says Nagpal. “I actually expect there to be a very difficult six, 12 or 18 months for fintech companies in particular.”
Ocho’s twist on the competition, he believes, lies in its market focus. “There are so many companies targeting startup founders and their wealth – there’s literally a new one launched every month or two, all backed by big-name VCs, but no one is focusing on the business owner who is doing well but is not a startup founder or startup employee,” he said.
Instead, Ocho builds on Nagpal’s track record of working with creators when he was building Teachable. Teachable has helped creators create revenue streams; Ocho wants to help these same creators take their earnings and invest, harvest and scale them in smart ways.
“At Teachable, we’ve helped these people make money online and there are now plenty of places for creators, freelancers and entrepreneurs to make money online – but how can we help them thinking about wealth creation? Napal said. Ocho’s long-term vision is to offer products, beyond solo 401(k)s, that help business owners create wealth.
Human Interest is one of Ocho’s closest competitors, raising $200 million at a $1 billion valuation last year. Nagpal says Ocho differentiates itself because it focuses more on individuals, freelancers, and creators, rather than targeting small and medium-sized Human Interest businesses.
For now, Ocho charges a flat annual fee of $199 to help individuals start their retirement account. Setup takes about 10 minutes and 48 hours to get final confirmation.
The big challenge for the startup is to get good solopreneurs to care about their retirement accounts. He’s looking for people who have income-generating businesses, but don’t have full-time employees. If you have a side job to your full-time job, you can create a 401(k) just for side hustle, but you can’t contribute full-time income to the retirement account.
Nagpal believes he can achieve early adoption through smart educational materials and awareness, pointing to personal finance trends on TikTok as an example of consumer demand for more information. He says 40% of Ocho’s staff work on marketing or education, and the rest will be retained even as the business scales.
If education is so important to making Ocho work, one wonders why it’s launching with a fintech product. The answer is simple: deadlines. Users must create a retirement account by December 31, 2022, if they want one for 2023, which puts fintech in a relevant but time-pressed position.
Nagpal is not worried about the seasonality of the 401(k) product due to the upcoming product roadmap, which includes the education product, investment flows in the retirement product like the possibility of investing in startups and ETFs, and even HSAs, often described as a 401(k) for healthcare.
To propel this ambitious product spree, Ocho raised $2.5 million from Nagpal’s own venture capital firm, Vibe Capital. The entrepreneur says he raised the first $60 million fund for Vibe Capital with the idea that he would incubate one or two company startups, which came to fruition today now that she owns 20% of Ocho.
Nagpal admitted that the idea of a founder using his own venture capital firm to start his own startup might seem like the “mother of all conflicts of interest,” but felt it was anything but. He emailed all the LPs in his fund about the investment, got a unanimous yes, and ended up raising at a much lower price for the startup than if they had gone out on the fair market. . It’s still rare to see founders selling a company, starting a venture capital firm, and then using that same venture capital firm to launch their next venture.
Perhaps the unique connection between Nagpal’s first venture, his company, and his new start-up could indicate what his approach to personal finance might be: diversifying across multiple vehicles, redefining what a supercharged investment might look like, and continuing to learn.
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