The truism goes that you have to have money to make money. But for those who lack access to financial literacy resources and education, how you go about growing your money is not always clear or easy.
This is something that Chukwuchebem “Chuk” Orakwue knows all too well. Growing up poor in Nigeria, he lacked access to resources to improve his financial literacy. It wasn’t until later, when he began to make money, that he realized the importance of such knowledge.
When he was 15, Orakwue emigrated to the U.S. to attend Rochester Institute of Technology, where he studied electrical engineering. Upon graduating, he accepted a position at Intel. Finally at a point where he was earning money, Orakwue says he was unsure of how to grow it. So, he decided to do something about it, seeing what, he says, was an industry “ripe for disruption.”
Applying what he knows from engineering, Orakwue began developing and testing a model to solve what he saw as the greatest barriers to achieving financial security: financial literacy and capital. The result is Xantos Labs, which Orakwue describes as an automated investment advisor focused specifically on equity management. Its mission is to offer a low-minimum, low-fee, premium investing experience that allows anyone to invest — no matter their income level or financial acumen.
“We believe investing shouldn’t be an exclusive privilege of the wealthy,” the company’s website reads. “Everyone deserves the opportunity to achieve financial security for themselves and their loved ones. This is what drives us every day. To help our clients systematically grow their nest eggs.”
For this computer engineer turned business owner, pivoting to investment management just made sense. “I realized that I could have a lot more impact, touch so many more lives by applying myself and the skill set that I have in the investment space,” Orakwue says. “I use them to strive for better outcomes for thousands of people like myself, who want to invest but are getting doors shut in their face because they do not have sufficient capital, they do not have sufficient experience.”
Wanting to further refine his skill set to have even greater impact, Orakwue decided to get his MBA. In May, he, along with his business partner, fellow Consortium student and Xantos Labs’ Head of Growth Lou Ortiz, graduated from the University of Texas at Austin McCombs School of Business. There, the experience they gained as two of 16 students selected to manage the school’s $30 million MBA Investment Fund prepared them to make their dreams for Xantos Labs a reality.
According to Orakwue, investing can be distilled down to two things — “knowing what to invest and knowing how much to put into each of those investments,” he says. “This is where we apply our engineering skill set.”
In a marketplace focused on bringing average returns, Orakwue saw an opportunity to truly help clients achieve financial security. Using the model he developed (not to mention, in-depth research), Xantos Labs is able to simulate all different macroeconomic conditions, which they use to determine which companies to invest in — and when.
“Part of investing that I really want to bring up to speed is knowing when to balance being aggressive and being conservative,” Orakwue says.
To do this, Xantos Labs takes a systematic approach to investing — removing the emotion.
“We test things through different environments,” says Orakwue. “Every time we put a stock in there, we’ve tested it — how would this have performed if we had it during the Global Financial Crisis, if we had it in the dot-com era?”
By estimating the likelihood of a recession and shifting away from risky businesses (i.e., restaurants during the pandemic) into what Orakwue refers to as “defensive stocks,” Xantos Labs is able to deliver better than average returns for its clients. All the while, simplifying the process and removing costly barriers to entry.
“For a lot of shops, you typically have to have millions and millions of dollars to get into a hedge fund, or you have to be an accredited investor and have tons of money,” says Orakwue. “In addition to that, they charge a very high price — 2 percent is the industry standard, plus 20 percent of how much that gained.”
With Xantos Labs’ new mobile app — released in the U.S. in July — users can get started investing with a minimal investment of $500.
“You don’t have to be super rich to achieve better outcomes,” Orakwue says. “Through this app, you can get invested and get going.”
The app allows users to invest, track their investments and communicate with an investment manager and allows Xantos Labs to educate clients along the way. The company’s systematic approach to investing is also mimicked by the app, making the investing process seamless for clients.
“The execution is automatic,” says Ortiz. “The algorithm solves for the appropriate allocation of the stocks that are going to be in your portfolio, and then it makes those trades for you — so you don’t have to lift a finger.”
When it comes to giving credit where credit is due, both Orakwue and Ortiz give much to The Consortium and its network, as well as McCombs, for helping bring Xantos Labs and its mission to life.
“Being able to tap people from all walks of life and have them look at what we’re doing and make recommendations, challenge us on things that we thought were pretty fundamental, and ultimately make a better product — that has definitely been invaluable,” Ortiz says.