People who have $5 to invest should have the same choices as people with $5 million, Brooke Roberts believes. She shares her ideas for the RNZ series RICH: The meaning of wealth in Aotearoa.
In 1986 when I was 11-years-old my school teacher, Miss Edmonton, used to bring newspapers in to class and get us to go through the stock market listings and pick our favourite shares. This theoretical exercise in the name of financial literacy was thrilling, because almost every day our shares climbed.
Miss Edmonton’s enthusiasm for shares was not unique, the stock market at the time was surging in the wake of the Lange government’s free market reforms. Kiwis from all walks of life were investing, and it was paying off. But the easy money didn’t last. On October 20, 1987, the stock market crashed and countless so called “Mum and Dad investors” got badly burned, losing millions overnight and in the following weeks.
Confidence in share market investing also plummeted. Kiwis stopped buying shares, and the more tangible “bricks and mortar” of housing became the overwhelming preference for building wealth.
Now, nearly 40 years on from the crash, there are finally signs that the wider public’s wariness of investing in shares is shifting. Sharesies is one sign of that.
Sharesies was launched in 2017. It is a digital investment platform and app that allows users to buy and sell shares, even fractions of shares, for as little as one cent at a time. Anyone, no matter their financial status or background, can trade on the stock market.
“Why can’t someone with $5 have the same opportunity as someone with $5 million?” said 33-year-old Brooke Roberts, who started the company along with Leighton Roberts, Sonya Williams, Ben Crotty, Martyn Smith and Richard Clark.
“When we first started, it was males over 60 living in Auckland who were the majority of shareholders. And we’re changing that. We’ve got people from zero to 97 years old. We’ve got a range of gender and diverse ethnicities that use Sharesies.”
Roberts said from the outset their plan was to democratise investing and make it accessible to a new generation who were feeling locked out of housing wealth.
“Sonya had the initial idea behind Sharesies where she was like ‘I wish I could invest $50. I wish it could mean something’. At that time, there was a lot of media about millennials not getting into houses because they are spending all their money on smashed avocado. Just knowing that’s not the case actually, it just felt really hard to develop wealth or have a future.”
Sharesies now has about 665,000 active users in New Zealand and Australia who have collectively invested over $2 billion.
Roberts is aware that not all of their investors have high-level financial literacy or an in-depth understanding of markets that professional sharebrokers do. But, she says, starting small allows new investors to build their financial literacy as they go.
“I get kind of put off where people say ‘oh it’s the people’s fault, they haven’t learned’. It’s actually the system’s fault. There’s been structural issues within finance that have made it less accessible to people. We’re not really taught at school that well.
“So, there’s a lot of opportunity to create more access and more inclusivity when it comes to finance, and we’re just kind of scratching the surface really.”
But are Kiwis really going to build wealth buying small pockets of shares at $5 a pop? Roberts says it’s about consistency over time.
“So if we can instil in our tamariki or instil in our habits early on that consistency of putting money away every payday, amounts we can afford, and building it up over time, your money starts making money through compounding interest. I think that is such a powerful thing for more people to be aware of.”
As people learned the hard way in 1987, investing comes with risk. But Roberts says they are careful to ensure people understand what they’re buying into.
“Lower risk or higher risk, we do heaps in the education space too to make sure people are aware of what they’re investing in and learning as they go.”
And she insists share market investing in 2024 is radically different to the wild west investing of the 1980s. Nowadays, there are far more regulations and oversight from the Financial Markets Authority and much more comprehensive company information available.
“I remember hearing stories of people going all in to one corporation, now you can invest in a range and kind of have that diversification where you’re not just putting all your eggs in one company.”
From zero to $500 million
The journey for Roberts to becoming a top entrepreneur and co-CEO running a company valued at $500 million has been rapid. A Wellingtonian, she previously worked in finance roles at KiwiBank and accounting firm Xero. Some of the other founders did too, although they were not all known to each other.
In fact, it was only when word spread through the group about a hobby investment club that the idea for Sharesies really took off. Before long, the founders were testing the Sharesies idea through a business accelerator scheme run by Creative HQ and KiwiBank. The scheme gave them three months to hone their product before quitting their jobs and going all in.
For Roberts, the entrepreneurial drive to go it alone was there from a young age. She was already trying to set up businesses while at high school including an attempt at her own tuck shop.
“Looking back, I was always entrepreneurial. I don’t know particularly why. I know my grandparents, my poppa, he had his own little hardware shop in Manurewa and then I think he ran like a sandwich tuck shop or something. So maybe there’s something in my genes.”
What drives a lot of Roberts’ thinking with Sharesies is ensuring it has a purpose to do good in world. It has now been certified as meeting the European B-Corp standard for social and environmental performance.
“Do we have good standards and practices to support the environment? Are we supporting our employees? The community is really thinking about stakeholders, we even have that in our constitution that we’re not just here for shareholders, we’re here for stakeholders. And that’s taking a real broader view of what business is for.”
That doesn’t, however, extend to the companies that Sharesies users invest in. Roberts says Sharesies decided not to take a purely ethical investing approach, meaning shares in an arms manufacturer in the US, for example, could be accessible for users.
“What we decided actually was the most important thing we could do is enable people to have choice. So that’s why we’ve got around 10,000 or so investment options on Sharesies.”
As Sharesies grows, however, don’t discount the possibility of some shareholder activism creeping in – whereby groups of Sharesies shareholders band together to vote at company meetings and force the board to take socially responsible positions.
“I think in time I can imagine that being the case, you know. We definitely do voting now and Sharesies shareholders do make up a substantial part of some companies shareholdings like, say, in Air New Zealand for instance.”
In 2021, a capital raising of $50 million effectively valued the company at $500 million dollars. But Sharesies is still very much a growth business and Brooke Roberts admits that while some parts of the business are making profits, others aren’t yet. This is not unusual for fast growing start-ups.
“You know, if things are going well and you’ve got enough tailwinds behind you, then it’s worth investing more, and that is definitely the case we’re in.”
One thing Roberts says has really helped Sharesies has been a change in attitude between other start-ups, to one that is more collaborative and collegial. This has been particularly helpful, she says, given they are doing something that’s going against the grain.
“I think that there’s been some shifts in that. I definitely have noticed a lot of founders get together now and we support each other on this weekly call with other founders.”
Being the co-founder of a half a billion-dollar company will have undoubtedly made Roberts wealthy. But in her mind, wealth is a very broad term.
“I don’t think wealth is about being flashy. I think wealth is quite a well-rounded term. Health is probably the biggest wealth any of us can have and then financial health creates opportunities for people.
“Also, how does that enable society to be better? So, I think it’s important that there’s more money circulating and that more people do have access to opportunities to develop wealth and that ultimately enriches the whole economy over time.”
By Corin Dann of rnz.co.nz
