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Belong, a UK-based personal savings and investing app, emerged from stealth mode and announced that they have raised a $3.7mm Pre-Seed funding round. That appears to be quite sizeable compared to the typical pre-seed raise, which is usually around $500,000 (1) . In fact, it is reportedly "the largest such round ever secured by female founders in Europe" (2) . The deal was lead by Octopus Ventures and joined by several prominent industry figures. We have not seen the platform yet as it will not be launching for 29 days, 19 hours, 2 minutes, and 56 seconds at the time of this writing, according to the website. But they professes to target Millennials to get them started on their saving and investing journey early. Items they say they will be offering are education, easy investing, an excellent user experience, and an innovative feature: a "boost loan." The boost loan will be a loan users can obtain to increase their investments. The founders point out that long-term wealth is built with time and money. While Millennials have plenty of time, they usually lack the money. The boost loan is an effort to solve for that. The fee for Belong is 0.95% of assets, which seems to be above the average for digital advice or personal investing apps. But they also say that they will be embedding other financial services in the app over time. (1) DocSend, "The Pre-Seed Round Defined" https://cdn2.hubspot.net/hubfs/6191183/The%20Pre-Seed%20Round%20Defined.pdf (2) Fintech Global, "Belong pioneers new era in WealthTech with groundbreaking £2.95m pre-seed round" March 26, 2024 https://fintech.global/2024/03/26/belong-pioneers-new-era-in-wealthtech-with-groundbreaking-2-95m-pre-seed-round/

Copilot Money, a personal financial management app similar to the old Mint.com, has raised a $6mm Series A round led by Adjacent. Prior to the Series A, Copilot had raised an undisclosed amount in a Seed round, but since it was undisclosed, we feel it might not have been very much. All the better for them. This perhaps raises awareness for a branch of WealthTech that we don't talk about much: personal financial management. I programmed my first personal accounting system back in 1988. As was the fashion of the day, it was an extremely grotesque Frankenstein of a spreadsheet laden with macros. Still, I would like to think that, had I pursued it, Quicken would be named after one of the characters in Lord of the Rings today. But one of the things I was careful to address in my system was investments. Oddly enough, Quicken, and especially Mint, never really put in place any real functionality to track and understand investments. While I have not used it, Copilot Money professes to do a good job at tracking investment, which I consider a gap in the market. Perhaps that, and the fact that Mint shuttered and passed some of its features to Credit Karma, might be why Adjacent felt it was time to pour some gas on the fire. Their URL is not necessarily intuitive, but it is copilot.money

Apex Fintech Solutions announced that they have acquired AdvisorArch, a WealthTech company that enables automated rebalancing and direct indexing. This is perhaps an excellent example of how acquiring WealthTech companies can plug holes in a set of product offerings, accelerate roadmap items, or possibly both. Apex CEO Bill Capuzzi commented that "this acquisition strategically fills a crucial gap in our platform, providing access to the most advanced, customizable, and scalable rebalancing and direct indexing solution on the market. This marks a significant milestone in our journey to empower advisors.” We expect acquisitions of earlier stage WealthTech firms by larger WealthTech and financial services firms to increase for the following reasons: The WealthTech space is highly fragmented. Advisor are encouraging their technology providers to consolidate functionality into fewer platforms. Technology platforms are racing to add as much functionality to their products and time is of the essence because, once an advisor chooses a platform, they are unlikely to change for quite some time. The venture capital market is in a bit of a slowdown. Small firms can produce software faster and cheaper than large firms. Small firms can often innovate faster than large firms. Unlike the past, most small firm offerings are built cloud native with very modern tech stacks that can be easily integrated. Congratulations to Apex and the AdvisorArch team! Link to Press Release

Wealthfeed is a platform that uses AI to try and identify which of an advisor's clients and prospects are experiencing a "Money in Motion" event. Examples might be inheritance, sale of a home, or sale of a business. It fits in with our AI WealthTech theme which we call "CoCoDec," which is by no means a catchy name, but it is shorter than "Compliance, Communication, Data Enrichment and Cleaning." By reaching out during a money in motion event, the company claims that closure rates increase. The round included one venture capitalist and several individuals. With several individuals from the industry, what we call "semi-strategic investors." Justin Wisz, Founder of Thicket Ventures, and Joe Jolson, Founder & former CEO of JPM Securities, which sold to Citizens in 2021, both joined the Board of Directors. Link to Press Release

MSCI announced that it has acquired Foxberry, an index creation and analysis platform with a modern user interface. Many WealthTech players in the US may not know Foxberry because (1) it is based in the UK and (2) it serves institutional clients. However, we thought it worth mentioning since the press release seems to indicate that the acquisition was driven by the desire to add "a new client-centric, interactive experience" to custom index construction. We see this as an example of the desirability of an optimized user experience and also as an example of the power of buying vs building in certain cases. While we were not involved in the deal, the usual reasons we see for going the acquisition route include: (1) time to market, (2) cost savings, and (3) significantly de-risking the project at the corporate level. Terms of the deal were not disclosed but are expected to be immaterial to MSCI's finances, according to the release. The release also suggests that custom indexing solutions are in demand on the institutional investing side of the fence. At the institutional level one of the big draws is in dealing with "the challenge of balancing competing investment objectives" while in the wealth space we talk more of tax efficiency, flexibility, client preferences, and demonstrating additional value to the client. Link to Press Release

This is the first article we have seen where some VCs were complaining about the entry of Corporate Venture Capital into the early stage investment market. Their data shows that 80% of the VC deal volume flowing into generative AI companies was tied to CVCs. The article quotes some VCs who see this as a detriment to the market. Pitchbook did not give any data specifically for WealthTech in this article, but anecdotally, we are seeing CVCs and strategic investors being more aggressive in WealthTech. In our opinion, this is a healthy development for WealthTech as strategic investors know and live the pain points in our industry and are perhaps better able to spot solutions that work. In addition, they can be potentially large consumers of a startup's product, which can accelerate growth, both of the owners of the startup and the strategic's investment. We consinue to encourage all larger financial services firms to consider starting a Corporate Venture Capital arm. Link to Article

Today saw another example of a strategic investment in the wealthtech space. Trust & Will, a wealthtech firm that has built a platform to allow people to create estate plans at scale, has received a strategic investment from Erie Strategic Ventures, the venture capital arm of Erie Insurance. According to the press release, it appears that Erie Insurance will also be partnering with Trust & Will to bring affordable estate planning to their insurance customers at scale. We see this as further evidence of the benefits of a corporate venture capital program. By making an investment in a vendor they are adopting, they are strengthening the vendor, strengthening the vendor relationship, and perhaps helping to influence further development. Additionally, they may be placing a thumb on the proverbial scale when it comes to investment return by bringing 6 million policyholders to the table. We saw something similar when American Express decided to acquire Bodeswell after a successful pilot. Link to press release: https://newsdirect.com/news/trust-and-will-announces-strategic-investment-from-erie-strategic-ventures-166148964

OneAdvisory, a firm that provides unified data management for wealth management firms, announced that they closed an $8mm Seed round lead by F-Prime. Amongst the new faces in the round were Valor Equity Partners and two strategics, The Compound Capital Fund I (Ritholtz) and Flyover Capital (Mariner). This is perhaps an extension of the theme of strategics making minority investments in the tools that they feel can solve pain points that they themselves have. Makes perfect sense to us. Additionally, they are rebranding from OneAdvisory to "Dispatch" to better capture their role as a centralized data hub for an advisor's perhaps disparate tech stack. This rebranding serves to underscore their belief that there is an emerging wealthtech category of "Data Orchestration", which is not yet on the Financial Advisor Technology Map produced by Michael Kitces and Craig Iskowicz. One could argue it falls under "Advisor Data Warehousing" but the ability to keep data synced across multiple databases in an advisor's tech stack makes it feel something a bit apart from that. We feel that the raise underscores how important the data layer has become in wealthtech. We believe that future wealthtech development will start with the data architecture and end with the feature sets instead of the other way around. Another example might be Orion's rather formidable project to unify their data in RedShift. This trend is firmly on our radar for 2024 and beyond. Link to press release: https://www.businesswire.com/news/home/20240111525934/en/OneAdvisory-Rebrands-as-Dispatch-Closes-8-Million-Seed-Funding-Round

Vestwell raised $125mm in a Series D to continue it's mission to close the savings gap for Americans. Although the release did not give a valuation, Bloomberg is reporting that people familiar with the transaction estimate it to be around $1 billion (1) . They have raised approximately $240mm to date according to Crunchbase, so the valuation is not a stretch given the market penetration they have been able to achieve. If true, it would be one of the few WealthTech unicorns out there at the moment, which is impressive given that they only launched in 2016. The latest round also saw two new investors, HarborVest and Blue Owl, two private equity/private debt firms, so it seems like they are moving up in terms of zip code. Three existing VCs also participated in the round, including 3 of the 4 original investors: Fintech Collective, Fin Capital, and Commerce Ventures. We didn't see a mention of any of their existing strategic investors in this round, but the support there is significant: Goldman Sachs, Nationwide, Allianz Life Ventures, BNY Mellon, Franklin Templeton, Wells Fargo Strategic Capital, Morgan Stanley, and others. Vestwell's success seems to come from learning how to crack the code for the US workplace savings market, one of the largest, least crowded markets in the US, if not the world, in our opinion. Furthermore, it has managed to do this despite a highly concentrated and entrenched recordkeeper environment and a lower legislative agenda around addressing the advice gap, at least compared to countries like the UK. And no mention of AI anywhere. Link to press release: https://www.vestwell.com/news/an-american-fintech-success-story-vestwell-raises-usd125m-series-d (1) Swetha Gopinath  and Aisha S Gani , "Goldman-backed Vestwell Raises Funds at $1 Billion Valuation" Bloomberg, Dec 22, 2023. Link

Last week, ABN AMRO announced that it was acquiring European-based neobrokerage BUX for an undisclosed amount. Earlier this year, BUX had been in talks to be acquired by N26, the German neobank, for a reported EUR 100mm. However, that deal fell through at the last moment (1) . Last month, BUX announced 40% layoffs and a retreat from their UK expansion goals in a bid to get to profitability by the end of this year (2) . Reuters is reporting  that BUX was burning approximately $17mm per year on a $2.7mm revenue base as of the end of 2022 with a client base of 500,000 (3) . Even with the company's desire to get to profitability this year, this may seem like some fancy math for a stand-alone these days. But in our view, if ABN chose to be opportunistic here, they had the means to do so. According to ABN AMRO's public filings, their wealth division produced approximateyly $685mm in the 4 quarters ending September 2023 . They were also well positioned to be opportunistic since they were one of the earlier investors in BUX via it's venture capital arm and had the opportunity to work along side them in launching the first european fractional ETF trading facility. This is perhaps the latest example of strategic acquirers using a "rent-to-own" approach to M&A where they "step-in" with a minority investment so they can better learn, evaluate, and innovate prior to a potential full acquisition. Last week, we also saw TMX use the same strategy in its acquisition of VettaFi . This potentially signals a new phase in venture funding, at least as it relates to WealthTech. Link to press release: https://www.abnamro.com/en/news/abn-amro-to-acquire-bux (1) Dennis Schwarz, Arno Schütze, Andreas Kröner, "N26 Wanted to Buy Dutch Broker Bux", Handlesblatt (Germany), Feb 15, 2023. Link. (2) Jafar, Bilal, "Tencent-backed fintech BUX cuts 40% of staff in bid to turn profit", Financial News (London), Nov 14, 2023. Link. (3) Stirling, Tobey, "ABN Amro buys loss-making online brokerage Bux", Retuers, Dec 14, 2023. Link.

TMX Group (Toronto Stock Exchange) announced that they were acquiring VettaFi (ETF Trends, ETF Database, Advisor Perspectives, and various index providers). The press release states that the transaction value is 15.4x 2024 estimated adjusted EBITDA. Including the 22% that TMX bought earlier this year, that brings the merger consideration to about $1 billion. This seems to us to be a continuation of the theme of public stock exchanges diversifying away from their core business of equity transactions and associated data, an activity that is being commoditized, to ancillary value-added products. The London Stock Exchange's acquisition of Refinitiv might be seen as another example. We also note that TMX used a "step-in" strategy. They first acquired 22% of the company last March and then got to know them better via a working partnership. Perhaps that is why they are able to close the transaction so quickly (next month). This can be an effective way for a strategic to make acquisitions that work. On the analyst call, management emphisized how beneficial the working partnership was in assessing the functional and cultural synergies. Link to press release: https://www.tmx.com/newsroom/press-releases?id=1169

BNY Mellon and Lunate, a $50b Abu Dhabi based private equity/alts firm, are teaming up to build-out an entire end-to-end advisor platform from the ground up for the MENA market. And they are going to spend $300mm doing it. It's certainly not the sort of thing you see every day. Building from scratch is a wonderful pleasure. Done correctly, it allows you to harness all that is exciting about the tech advances we have had over the last 10 years. But greenfield tech projects at large companies often have trouble, so it does have us scratching our heads a little bit on a few points. Perhaps as we learn more about this it will be clearer. Building internally gives you the most flexibility and customization. That could be an important factor when trying to customize a product for the MENA market. But it also takes a lot more money and can lengthen time-to-market vs what a true start-up can do, which is one of the principals behind "tech buys" or strategic acquisitions to access pre-built technology. I am sure many WealthTech entreprenuers are looking at that $300mm number and thinking they could build it a lot cheaper. The decision to build from the ground-up is also noteable as time-to-market in the WealthTech market is currently of paramount importance. They are saying that it will start serving clients in 2024, which seems like an overly aggressive time table, although I will point out that Ainslie Simmons was able to do something similar at PershingX/Wove, so perhaps they are going to run with her playbook. Of course, the $300mm could also include a tuck-in acquisition budget, giving the new venture the ability to customize the chasis and rapidly bolt-on functionality via acquisition. Perhaps that is the best of both worlds. If it works, we could see more of this in the future. But, only time will tell. Here is a link to the press release: Link