Deal Radar 2008: Cake Financial

Cake Financial is an online social investing network that enables individuals to improve their portfolio’s performance. Members can link their accounts to the Cake site, track the performance of their portfolios, and develop networks to harness the expertise of other investors and use the knowledge of the Cake community’s top performers.

Though members can view the performances of their friends’ and families’ portfolios in real time, the site assures maximum security and does not share portfolio values, sizes, cost of positions or the number of shares owned with other members. Cake’s metrics are based on portfolio percentages, not quantity of shares. Members can add their accounts and portfolios from most of the online brokerage firms to the Cake site in order to get a comprehensive look at their holdings. Members are ranked based on the performance of their portfolios, the highest rank being “Elite”.

Cake was founded in April 2006 by CEO Steven Carpenter, who was previously a senior director at RealNetworks. The company is headquartered in San Francisco. It received an undisclosed amount of angel funding from Baseline Ventures, Godel Capital and private investors. The Series A round was funded by Alsop-Louie Partners.

In a VentureBeat survey on social investing sites, Carpenter says the company plans to make money by selling the practices of top users to institutional investors. According to Forbes, Cake is expected to receive its registered representative license soon and will be able to execute trades for members who want to mimic the strategies of top investors. Carpenter also plans to start a mutual fund based on top investments and may charge a fee for a detailed look at the most successful members’ portfolios. The survey also discusses Cake’s competitors, which include Covestor, SocialPicks and MarketGuru, among others.

According to Quantcast, the Cake site had fewer than 2,000 monthly US unique visitors, of whom only 27% were regulars and the rest passers-by. The Compete visitor count was about 7,000. The site follows over $1 billion in investments. Revenue numbers are not available as of date.

It’s a relatively new company, and presumably, they are still sorting through the details of how to package their value proposition.

This segment is a part in the series : Deal Radar 2008