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iCapital, an alternative investment platform for the wealth management industry, announced that they will acquire Mirador, a data aggregation and reporting platform with extensive alternative investment capabilities. The firms believe that the combined offering will enhance iCapital's ability to bring alternative assets down into the high-net-worth segment at something approaching scale. This fits in with our "Family Office As-a-Service" theme. We believe that the industry can use technology to scale some of the services found primarily at large family offices and private banks and bring those services down market into the high-net-worth market. The key is to allow advisors to provide these services without having to expend additional effort or acquire extensive expertise. Alternative Investments is one of those services. Link to press release

NewRetirement, a comprehensive financial planning and financial wellness platform serving individuals and enterprise clients, announced that it has raised $20mm in a Series A funding round. The round was lead by existing investor Allegis Capital and quite a few other VCs, some of which are new faces to NewRetirement, from what we can tell. We like seeing that. Several Corporate Venture Capital arms also participated, namely Nationwide Ventures and Northwestern Mutual Ventures, which isn't surprising to us given the large-scale problems insurance companies have when it comes to financial advice and the solutions technology can provide. Amongst other things, NewRetirement will use the proceeds to continue to scale, enhance its enterprise offerings, and, of course, integrate LLMs and AI to provide more personalized recommendations. We will also point out that Benjamin App also announced that they raised money from VCs: $5.5mm in a Seed round. While Benjamin is not WealthTech (they are a cash rewards app), it's close enough for us to notice, especially since we are always on the lookout for the arrival of Spring in the WealthTech VC funding market.

WealthTech Strategy Partners welcome Brian Colville as the newest team member. He has over 25 years of experience in the industry, most notably he spent 17 years as the Founder and CEO of Colville Consulting, a trusted technology and investment operations partner providing a highly-diverse set of software, data, technology, and highly tech-enabled investment operations services to leading institutional asset management firms, wealth management platforms, and other fintech software providers. Colville Consulting’s services included: portfolio accounting, trading and CRM system implementations, custom software development, data aggregation and transformation; trading, trade order management and trade reconciliation; position- and tax-lot reconciliation; BI and reporting; partnership accounting; deep systems- and counter-party integration; market data management and corporate actions-related services; and a range of regulatory compliance services including SEC audit support and periodic regulatory filings (13F and 13G). Known as GIPS experts, Colville Consulting provided a range of composite performance measurement services. Colville Consulting also provided pre-and post-acquisition consulting and enterprise integration services for private-equity-led asset management and wealth management roll-ups. Colville Consulting representative clients included: • Ashland Partners (Adviser Compliance Associates) • Aperio Group (BlackRock) • Becker Capital Management • Bingham, Osborn and Scarborough • Boston Private • Chevy Chase Trust • Coldstream Capital • Evercore • Focus Financial • Freestone Capital Management • Ferguson Wellman • Guggenheim Investments • ICONIQ Capital • Morningstar • Rydex Funds • Sand Hill Investment Advisers • Schwab Institutional • Seattle Northwest Securities/ SNW Asset Management • Security Global • SunTrust • Wetherby Asset Management (Laird Norton) We are delighted to have him aboard!

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