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eCommerce - Wednesday, August 24, 2005

HedgeStreet - Profile

HQ: San Mateo, CA

Founded: 2004

Management: Dr. John Nafeh is founder, chairman and CEO. He is also managing director of VC firm Pareto Partners - a global firm that specializes in currency and risk management. Russell Andersson is VP, co-founder and acting President. He was a General Partner of Eden Ventures, a UK venture firm. The technology team is fairly impressive.
Investors: The company raised an undislosed amount in seed funding from Pareto Partners.

Business Model: HedgeStreet hopes to bring financial derivatives to the little guy. HedgeStreet is a person-to-person marketplace where users can speculate on economic events such as the price of gas, gold, housing inflation and dozens of other indicators. Feeling ununeasy about inflation, buy a hedge against it. Contracts will sell for no more than $10 apiece, with each transaction of as many as 100 contracts carrying a fee of $5.

Competitors: HedgeStreet appears to be the first hedging service available to people outside institutions in the US. Outside the US, others that are roughly in this are include: Betonmarkets, Refcospot, ClickOptions, Binexx, Binarybet and Boxoption.

Dirt: HedgeStreet is very cool, although for most people the low contract limit makes it more of a toy then anything else. Feeling nervous about mortgage rates? A $10 contract isn’t going to make you feel much better. We wonder if that was imposed by regulators or does HedgeStreet have the ability to raise that limit. The company will need to raise a good amount of money to market this and gain market trust as eTrade and others did in the past.