AfterHour raises $4.5 million seed round (2024)

Kevin Xu once wore a knight’s helmet on MSNBC.

“Hello, I am the Sir Jack-A-Lot, and I’m here wearing a mask because I’m a millionaire and I’d like to stay anonymous,” Xu says straight-to-camera, introducing himself in the 2022 documentary Diamond Hands: The Legend of WallStreetBets.

Xu’s not anonymous anymore (as evidenced by, well, his name). In two years, he’s gone from incognito WallStreetBets guru “Sir Jack” to public-facing startup founder.

“The stock market, to me and I think millions of other people, feels like the most fun reality TV show, and we’re all playing,” Xu told me on Zoom. “There’s twists, turns, there’s earnings seasons, there’s stories every day. And everyone loves a plot twist! Everyone loves a resurrection!”

Xu unmasked himself last year—a kind of resurrection, I’d argue—to begin building social trading app AfterHour, which recently raised its $4.5 million seed round, Fortune can exclusively report. Founders Fund and General Catalyst led the round, and were joined by Pear VC and others. (It was among Keith Rabois’ last deals at Founders Fund before moving back to Khosla Ventures.)

You hear it all the time: VCs are looking for founders with deep knowledge of a problem, and an ironclad motivation to solve it. And, in a lot of ways, who fits that bill more than a former Googler who got online-famous turning $35,000 into millions in the meme stock craze? Right now, Xu says he’s trying to fill a gap, and it’s a gap that’s both generational and informational. If you’re a day-trading Redditor, you probably aren’t interested in a traditional financial advisor.

“There’s this kind of big hole in the middle,” Xu told Fortune. “I’m hoping AfterHour fits that hole for someone, for something that talks to you, and is moving at the speed of the markets, but is also credible…I’m about bringing credibility, transparency, trust, fun, and nativeness back to this space.”

Robinhood has social media features, but much of the discourse surrounding the meme stock craze was famously tied up in Reddit forum WallStreetBets, with traders communicating on social media while making trades on Robinhood—a platform whose trading restrictions have been the subject of controversy among that WallStreetBets crowd. But theoretically, verified users, brokerage capabilities, and solid education should all exist on one platform, Xu argues.

And Xu’s point about credibility speaks directly to one of the key problems at the intersection of retail investing and social media—that you can’t really know who to trust. How do you know who’s being honest about their returns, or their diligence on companies? It’s a space many would say is rife with potential scammers. But there’s a market here: Currently, there are about 16 million users subscribed to WallStreetBets, and retail trading reached its highest volume in 2023.

WallStreetBets is a subject of tension, with Xu at one point telling me he was “exiled”—strangely enough, for disclosing too much. But the strange trajectory of WallStreetBets does evoke a question about AfterHour: How big can something like this get? Many would still consider this to be a niche community. What actually is the total addressable market here? I ask Niko Bonatsos, a partner at General Catalyst.

“This is the hardest thing with consumer-facing companies in particular,” he said. “What was the TAM for Airbnb or fantasy football? At the end of the day, it takes a founder who is formidable to build the product for themselves, because they know that community so well that they can serve and dominate. It’s in the hopes that over time, it could become a more mainstream use case.”

So, the bear case for AfterHour then is this: It’s a limited market with a lot of unknowns, along with the reality that no one has yet totally managed to get social media stock platforms right. (Competitor Commonstock sold to Yahoo in 2023, for undisclosed terms.)

But what about the bull case?

“The bull case is that you’re able to leverage that into a financial institution…acquire users significantly cheaper, and get to a massive scale of retail investing,” said Pear VC partner Ajay Kamat. “Retail investing is growing, right? If you become the company that represents that growth, that’s really very interesting. There was E*Trade, then there was Robinhood, and now we’re kind of looking at the next generation.”

I talked to some of AfterHour’s users in my first-ever Discord town hall, attended by somewhere between 30 and 40 of the platform’s users who had screen names like Dracstar or Seymour_butts21. They talked about their confidence in the credibility of AfterHour, and their confidence in the credibility of one another. One guy talked as he hit a bong.

It felt like the punk rock version of the sorts of meetings that bankers have. But AfterHour doesn’t just want to be part of the system—so it’s making a new one.

In case you missed it…Tempus AI went public, raising about $410 million at a valuation of about $6 billion last week. Shares popped 8% in the SoftBank-backed company’s Nasdaq debut.

See you tomorrow,

Allie Garfinkle
Twitter:
@agarfinks
Email: alexandra.garfinkle@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.

VENTURE DEALS

- Echion Technologies, a Cambridge, U.K.-based developer of niobium-based materials for lithium ion batteries, raised $35 million in funding. Volta Energy Technologies led the round and was joined by existing investors CBMM, BGF, and Cambridge Enterprise Ventures.

- Constructor, a San Francisco-based AI-powered product discovery platform for ecommerce companies, raised $25 million in Series B funding. Sapphire Ventures led the round and was joined by existing investor Silversmith Capital Partners.

- Aim Security, a Tel Aviv, Israel-based developer of enterprise security against generative AI, raised $18 million in Series A funding. Canaan Partners led the round and was joined by existing investor YL Ventures.

- Omi, a Paris, France-based platform designed for product brands to generate 3D marketing, raised €13 million ($13.9 million) in Series A funding. Dawn Capital led the round and was joined by Founders Fund and angel investors.

- Aidentified, a Boston, Mass-based AI-powered prospecting platform for financial services companies, raised $12.5 million in Series B funding from FactSet.

- Daisy, a Costa Mesa, Calif.-based technology installation and services company for homes and offices, raised $11 million in Series A funding. Goldcrest and Bungalow led the round and were joined by Bullish, Burst Capital, and angel investors.

- GPTZero, a New York City-based platform designed to detect AI content, raised $10 million in Series A funding. Footwork led the round and was joined by Uncork Capital, Neo, Reach Capital, and Alt Capital.

- CleverCards, a Dublin, Ireland-based digital payments platform, raised €8 million ($8.6 million) in funding. Pluxee led the round and was joined by existing investors.

- AnyCreek, a Memphis, Tenn.-based marketplace for guided outdoor experiences like hunting and fishing, raised $1.8 million in seed funding from Bridge Investments, LaunchTN, existing investor Starting Line, and others.

OTHER

- Evercoast agreed to acquire Depthkit, a Brooklyn, New York-based developer of software designed for recording and live streaming volumetric video. Financial terms were not disclosed.

IPOS

- Concentra, an Addison, Texas-based provider of occupational health services, filed to go public. The company posted $1.8 billion in revenue for the year ending March 31, 2024.

PEOPLE

- Bessemer Venture Partners, a Redwood City, Calif.-based venture capital firm, promoted Alexandra Sukin to vice president.

Subscribe to the Fortune Next to Lead newsletter to get weekly strategies on how to make it to the corner office. Sign up for free before it launches on June 24, 2024.

AfterHour raises $4.5 million seed round (2024)

FAQs

What is the average amount raised in a seed round? ›

Seed rounds are a crucial part of the startup funding process. They help startups validate their business model, build their product, and grow their team. Seed rounds also give startups the capital they need to reach the next stage of their development. The average seed round is between $1 million and $2 million.

What is the AfterHour Founders Fund? ›

About us. AfterHour is the ultimate financial community platform for the internet generation. Our mission is to help people make better financial decisions together. Founded in 2022, we have raised $4.5 million in seed funding led by Founders Fund and General Catalyst, to become the new face of finance.

What is a typical valuation for seed round? ›

Generally seed stage valuations are anywhere from $2 million to $10 million and upwards of $20 million (for more experienced entrepreneurs).

How hard is it to raise a seed round? ›

Raising seed funding is one of the most challenging parts of starting a new venture. Without a ready product and with only business plans and projections to rely on, many will find it painfully challenging to raise capital. But yet some make the process of raising million dollar seed rounds look easy.

How much do companies give up in seed round? ›

How Much Equity Should be Given Away in a Seed Round? A general rule of thumb is giving away between 10-20% equity during a seed round. This may likely be to angel investors who are willing to put in checks right at the origin of a company during the early stages.

How much should I ask for in a seed round? ›

The range of amounts raised in a seed round

The average seed round in the US is between $1M-$2M, with the median being $1.5M. However, there are a number of factors that can impact how much you should raise. For example, if you are based in a less expensive city, you may be able to get by with raising less money.

How much revenue should you have for a seed round? ›

Investor community StartEngine recommends that companies aim to raise their seed round "when they have less than $3 million annual recurring revenue (ARR).”

How much dilution is expected in a seed round? ›

Seed round dilution: 20% (or more if you need more money) Series A round dilution: 20% Series B round dilution: 15% Series C round dilution: 10 to 15%

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