One Billion Dollars


Jul 04, 2020



Jul 04, 2020



After all the big headlines in the brokerage space recently (Charles Schwab buying TD Ameritrade for $26b, Morgan Stanley buying E-Trade for $13b), robo-advisors may finally be having their moment. The $1b price tag that Empower Retirement agreed to pay for Personal Capital is noteworthy considering it is the first “unicorn” exit in the space, but it also begs the question of what exit opportunities will look like going forward for the remaining cohort of robo 1.0 advisors.

Since the first generation of robo advisors got going in 2009/10, the maturation of the technology stack available to entrepreneurs has led to the emergence of a second wave of digital wealth management platforms. With wider adoption of new data sets (Quovo / Plaid) and more developed machine learning capabilities, the Robo 2.0 cohort is differentiating itself from the pioneers and the incumbents, and as a result, have their eye on exit valuations in the tens of billions.

For the traditional incumbents, there is now a fear of being left behind, and the focus has shifted from building to buying. Vanguard and Fidelity have chosen to go at it alone, but the Personal Capital news could be a sign of more consolidation in the industry. For standalone platforms, keeping CAC in check remains the main challenge to building a sustainable business. So an acquisition can be appealing, especially with fees elsewhere approaching zero.

As the U.S. heads into the holiday weekend to celebrate their own Brexit 244 years ago, will future entrepreneurs look back to this week as the date in history when robo wealth management became a thing?

Portfolio News

How a former navy seal helped launch nearly 60 start-ups this year - Portfolio company Antler's CEO - Magnus Grimeland - featured as Antler approaches its first Southeast Asia Virtual Demo Day on July 16th. Read more

‘Flying blind into a credit storm’: Widespread deferrals mean banks can’t tell who’s creditworthy - Bankers are tightening lending standards and looking for new data, like that provided by portfolio company Plaid, to help them figure out who’s risky and who’s not as traditional credit scores don't reflect missed payments covered by a provision in the government’s coronavirus stimulus package. Read more

The rise of DeFi: Compound (COMP) token analysis - Portfolio company TradeBlock released a report examining the DeFi space, yield farming, and in particular the possible value capture of these tokens. Read more

One Billion Dollars

Orion Advisor Solutions and Brinker Capital to merge - Genstar Capital will invest in the combined business, as will Orion’s existing financial partner, global growth private equity firm TA Associates. Orion and Brinker should have a combined $40b in assets under management and some 6,000 advisor clients, with Orion also working with some $1 trillion in assets under administration on its platform. Read more

Online wealth management firm Personal Capital sells to Empower Retirement in deal worth up to $1b - The deal is a likely win for Personal Capital. According to Forbes, the firm was worth $660m around the time of its Series F round of funds, which it raised in February of 2019. Read more

Next-Gen clients want more than robo-advisors - According to a new industry report, by using digital platforms to deliver advice at scale, firms can convert a service they have already been providing for little compensation — financial planning — into a revenue stream. Read more

Industry News

AI ‘only scratching the surface’ of potential in financial services - Financial services companies are becoming hooked on artificial intelligence, using it to automate menial tasks, analyze data, improve customer service and comply with regulations. Read more

Insurance start-up Lemonade shares double after IPO - Lemonade CEO commented in the FT that the firm had deliberately floated at an earlier stage than many other tech companies. He added "Seeing the companies that have IPO’d in the last few years after they’d done all their growth in the private market . . . I’m not sure that did any great long-term favours for those enterprises.” Read more

TransferWise is set to launch an investments feature - In 2018, the London based fintech made a deeper push into banking by offering a "borderless" multi-currency account tied to a debit card. Now, TransferWise plans to launch a service that lets users of the account invest passively in investment funds from third-party providers. Read more

Digital payments rules must be updated now - The scandal at Wirecard has not only exposed a multibillion-dollar fraud in the accounts and profound failures of oversight. It has also raised fresh questions of whether payments regulation in Europe has kept pace with the huge changes in the industry. Read more

Specialty lenders face funding challenge as Covid-19 boosts defaults - Some specialty finance companies that lend to midsize businesses are confronting the threat of a funding squeeze just as the coronavirus pandemic is causing defaults to rise, a potential one-two punch that could curtail their activities. Read more

US challenger bank Chime launches Credit Builder, a credit card that works more like debit - Chime wanted to develop a new kind of credit card experience due the growing popularity of debit cards in the U.S. In 2018, the U.S. Federal Reserve said debit cards represent 50% of all non cash transactions, the company noted. Read more

Rappi & Banorte: JV aiming to offer financial services on a massive scale - The joint venture announced by Rappi and Banorte is on a hiring spree and working to roll out its first financial product by late September. Read more

Société Générale acquires freelancer challenger bank Shine - The deal will add to the bank’s fintech ecosystem and will support SocGen’s small business and entrepreneur customers. According to reports, SocGen paid €100m for the French fintech startup, which has built up a customer base of 70,000 entrepreneurs in the two years since its launch. Read more

Venmo begins piloting ‘business profiles’ for small sellers - Mobile-payments app announced it’s piloting a new feature which offers small sellers and other sole proprietors the opportunity to have a more professional profile page on its platform. Read more

Senate approves extending small-business program - Senate voted Tuesday evening to extend a federal loan program by five additional weeks, a surprise move that would allow small businesses weathering the pandemic to continue receiving aid. Read more

The 416 quadrillion reasons why Japan’s supercomputer is number 1 - Covid means Japan can’t host the Olympics this year, but this is a fine lockdown consolation prize! The great processing might of "Fugaku" will be focused on parsing earthquakes, weather patterns and coughs. All helpful for insurance underwriting, but other parts of financial services will, of course, be taking note. Read more

Select Financings

Capital - New York based AI-powered capital-as-a-service platform raised $9m in Seed-extension financing led by AME Cloud Ventures. Read more

Curv - New York based digital asset wallet and infrastructure startup raised $23m in Series A funding led by CommerzVentures. Read more

Hi Marley - Boston based AI messaging platform for insurance raised $8m in Series A extension funding led by True Ventures and Underscore VC. Read more

Layr - Atlanta based insurtech startup that uses AI and machine learning to help small businesses customize commercial insurance bundles raised $5m in seed funding led by Sandbox Insurtech Ventures. Read more

solarisBank - Germany based banking-as-a-service platform raised $67.5m in Series C funding led by HV Holtzbrinck Ventures at a $360m valuation. Read more

Sundae - San Francisco based residential real estate marketplace that pairs sellers of distressed property with potential buyers raised $16.6m in Series A funding led by QED Investors. Read more

Willa - Sweden based freelancers banking and payments platform raised $3m in Seed funding led by EQT Ventures. Read more

Worky - Mexico City based HR software and payroll platform for SMEs raised $3m in Seed funding led by QED Investors. Read more


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