New York Angels board member Alicia Syrett pointed out that brokerages could offer an Instavest-like option to existing clients, which would destroy the start-up's stand-alone model.
But the founders are confident they've built a sustainable business.
"We believe that day trading is not actually good for the long term. But we want brokerages to actually acquire those customers, so that they can trade over a long period of time. Now if we coupled that with making good investments that have analytical rigor behind them, it's a win-win situation for all of us," Khatri said.
Nat Burgess, president of Corum group and former member of the SEC's enforcement division, questioned how the founders would prevent pump-and-dump schemes.
Khatri said Instavest enforces a 14-day holding period for leaders. Additionally, the platform only permits trading on the Nasdaq and NYSE, and does not allow trading in penny stocks. "In our opinion, that eliminates sort of 85 percent of the risk right there," he told CNBC.
Headquartered in Mountain View, California, with just three full time employees, Khatri told CNBC his start-up has grown 5-7 percent a week since inception.
Instavest says it's on track to hit over $200,000 in sales in its first year, and has raised upwards of $1.3 million in funds from investors like seed accelerator Y Combinator, venture capital firm FundersClub, and angel investor and former hedge fund manager Donald Dion.