Startup Spotlight #16: Occam's Razor
When it comes to investing, the simplest rules often work best.
Project Overview
Grifin’s proposition is nothing if not unique: “turn your everyday spending into investments.”
Although this claim might sound literal, your spending doesn’t directly transform into investments. Instead, Grifin enables users to invest in the companies whose products or services they purchase.
Here’s how it works: every time a user makes a purchase at a publicly traded company, the app automatically allocates $1 toward buying that company’s stock.
The startup has even trademarked this approach as “adaptive investing.”
To take advantage of it, users must download the Grifin app, connect their bank card, and allow the app to track purchases made with public companies. Stock purchases are executed weekly, but only after users review and approve a consolidated list of buy orders accumulated over the week.
Users can customize their experience in several ways. They can adjust the default purchase amount (from $1 to $99 per stock), exclude specific companies from automatic investments, or pause the process entirely until they choose to resume.
Following years of development and having attracted around $11 million in funding, Grifin’s app officially launched on February 22.
What’s the Gist?
Grifin promotes the idea of “investing on the go,” allowing users to live their lives while investments adapt to their spending habits. However, the app raises some critical questions about its features and methodology.
1. Portfolio Rebalancing
A cornerstone of long-term investing is rebalancing — adjusting one’s portfolio by selling or buying shares to maintain an appropriate balance based on confidence in each company. I feel like Grifin’s methodology could benefit from periodic suggestions to sell shares of companies whose products users buy less often or no longer purchase at all.
2. Spending-Based Allocation
Grifin currently doesn’t adjust investments based on spending amounts. For example, if someone spends $10 daily on Starbucks coffee but $100 weekly on Domino’s pizza, the app would invest $5 in Starbucks stock and only $1 in Domino’s. This discrepancy doesn’t align with the user’s actual spending weight.
The concept behind Grifin’s method is to create a personal “index fund” for each user, driven by measurable data — namely, their purchasing habits. In theory, this portfolio would reflect not just the frequency of purchases but the financial significance of each.
Grifin could even aggregate user portfolios into a global index, showcasing consumer habits rather than stock market speculation. Such an index would spotlight companies thriving due to sustained consumer demand.
Interestingly, startups like Stakeholder Labs and Tiicker are exploring the reverse relationship: encouraging shareholders to become loyal customers.
Stakeholder Labs’ Roundtable product, still under development with $4.2 million in funding, incentivizes investors with discounts and perks. Similarly, Tiicker ($10.35 million raised) connects companies with their shareholders to drive product engagement.
Key Takeaways
Reflecting on Grifin’s methodology, I realized that most of my daily spending happens in local businesses — restaurants, cafes and corner stores. I think it’s fair to assume that local businesses and non-public companies dominate many people’s spending patterns. For these cases, Grifin’s approach isn’t really applicable — at least currently.
An interesting alternative is SMBX, a platform enabling small businesses to secure loans directly from their customers. Investors can earn up to 9% annual returns by supporting businesses they trust. SMBX has raised $15.2 million to date.
Grifin’s model could theoretically extend beyond publicly traded companies, allowing users to invest in local businesses, bloggers, or app developers based on their spending and engagement levels. This would require removing subjective decision-making in favor of a purely index-based approach: if you use it or pay for it, it’s worth investing in proportionally.
A system like that could open new avenues for platforms connecting consumers with investment opportunities driven by their activity. While challenges and complications are inevitable, the potential for innovation makes the idea well worth exploring.
Company info
Grifin
Website: https://www.grifin.com/
Last funding round: $9.5 million, 01.06.2021
Total funds raised: $11 million over 3 rounds