Markets have been unforgiving to retail trading apps, but these three investing fintechs are bucking the trend.
Reported by Jonathan Ponciano and Hank Tucker
Scarred by the stock market’s worst year since the Great Recession, fintechs have been forced to reckon with an investing landscape that’s far different from the meme-stock heyday of the early pandemic. Just three investing companies landed on this year’s Forbes Fintech 50—the lowest count in the list’s eight-year history—but these firms have found sweet spots serving savvy investors, who are looking to diversify with private equity, Treasurys and even state-sponsored savings programs.
Returning to the list for a sixth-straight year, iCapital is still seeing massive growth thanks to the explosive popularity of alternative investments. The platform, which lets big banks and wealth managers offer investments like venture capital and private debt to their clients, is now used by about 97,000 financial advisors serving hundreds of thousands of high-net-worth individuals, who are increasingly coming from outside the U.S. Some $30 billion of the $155 billion invested on iCapital belongs to international investors, up from less than $8 billion a couple of years ago. In April, the firm teamed up with Bolton Global Capital to reach investors in Latin America—adding to partnerships in Europe, Australia and the Middle East.
Three list staples dropped off in 2023 amid the past year’s uncertainty: 401(k) provider Guideline, as well as Stash and Public.com, both of which offer brokerage services directly to retail investors. It’s been a tough year for the upstarts in the trading platform world. Shares of Robinhood, a member of the Fintech 50 before it went public in mid-2021, are still down more than 80% from their post-IPO trading high, and many other retail investing apps are also struggling—suggesting a potential reset to come for lofty valuations of years past, according to CB Insights.
Nevertheless, the list also includes two newcomers: Vestwell helps small businesses offer employees access to 401(k)s and spreading state-sponsored savings plans, and just last month, it was tapped by J.P. Morgan to help advisors keep track of their records. Founded in 2016, the firm now serves some 30,000 small businesses with accounts totalling $27 billion in assets. Meanwhile, two-year-old Atomic Invest, whose white-label brokerage helps businesses give their customers access to money market funds and Treasury management services, is fresh off amassing more than $1 billion in assets through its platform. One big growth driver? Silicon Valley Bank’s failure in March, which fueled an influx of new business from firms fleeing to safe-haven assets.
Here are the most innovative investing companies in fintech:
Atomic Invest
Banks, fintechs, credit unions and other consumer-facing finance platforms use its white-label brokerage offering to give their customers access to money market funds, wealth management and treasury management services. Also gives investment advice through its SEC-registered adviser named Helium. Since launching in November 2021, total assets have climbed to over $1 billion.
Headquarters: New York, New York.
Funding: $25 million from QED Investors, Anthemis Group, Softbank and others.
Bona fides: 45 corporate customers, quadrupling this year alone.
Cofounders: CEO David Dindi, 30; CTO Marco Alban, 29; and Engineer Emma Marriott, 29; trio who met as undergraduates at Stanford.
iCapital
Connects about 97,000 financial advisors and their hundreds of thousands of high-net-worth clients to private equity, private debt, venture capital, real estate and hedge fund investments with as little as $25,000 invested per fund—eschewing traditional minimums that can run from $1 million to $10 million. Now provides its institutional “white label” service to 200 firms, including BlackRock, KKR, Goldman Sachs and Blackstone. Late last year, iCapital acquired UBS’ proprietary alternative investment manager and the more than $7 billion in client assets it hosted.
Headquarters: New York, New York.
Funding: $765 million from BlackRock, WestCap, Temasek and others.
Latest valuation: $6 billion.
Bona fides: Assets invested through the platform have swelled 25% over the past year to some $155 billion across 1,200 funds.
Cofounders: CEO Lawrence Calcano, 60, a 17-year veteran of Goldman Sachs; managing partners Dan Vene, 47, and Nick Veronis, 58.
Vestwell
The platform serves as the engine powering savings plans, including 401(k)s, 529 college savings plans, and workplace IRAs promoted by states. Overall, it’s serving 30,000 small businesses and more than 1 million individual savers, up from 165,000 savers at the end of 2021. Vestwell has landed sponsorships with 30 state-sponsored savings programs including RetirePath Virginia, OregonSaves and California’s CalABLE. (ABLE accounts are state-run savings programs, similar to 529s, for disability-related expenses.)
Headquarters: New York, New York.
Funding: $150 million from Fin Capital, Goldman Sachs, Fintech Collective and others.
Latest valuation: $380 million.
Bona fides: Revenue more than tripled from $7 million to $24 million in 2022.
Founder and CEO: Aaron Schumm, 45, sold previous wealth management fintech FolioDynamix to Envestnet.
MORE FROM FORBES
Read the full article here
