Business Standard - Storyline on VC Funding in Disruptive Models

8/11/2019 Business Standard - Storyline on VC Funding in Disruptive Models

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Business Standard Article Storyline

Wealth / investment management is a big opportunity globally..Global private wealth is projected to post a compound annual growth rate (CAGR) of 4.8% over the next fiveyears to reach $171.2 trillion by the end of 2017. The Asia-Pacific region (excluding Japan)and especially itsnew wealthwill account for the bulk of this increase in global wealth through 2017 (reference:BCG Report).

Assets owned by mass affluent (people having investable assets between US$ 100K to US$ 1 Million) isprojected to increase from $59 Trillion in 2012 to over $100 Trillion in 2020, one of the fastest segment ofpopulation in wealth increase, and a largely underserved by wealth management industry as of now. The globalmiddle class (investable assets between US$ 10K to US$ 100K) is projected to grow by 180% between 2010and 2040, with Asia replacing Europe as home to the highest proportion of middle classes, as early as 2015.This further adds to a huge underserved market for wealth management. (Reference:PwC Report)

This calls for hundreds of billions of dollars in revenue for the currently underserved and growing customer basefor Wealth Management. Moreover, this generation is mostly digital and is always connected and mobile.Traditional players (banks, brokers and advisors) have a long way to catch up with this divide and are nowhereclose to offering a seamless, personalized, on the go wealth management advice. This has resulted indisruption through innovative startups and even bigger players hoping to catch a big pie of this trillion dollarindustry.

Wealth Management DisruptionAlready taking hold and here to stay.Various startups backed by some big investors like Goldman Sachs, JP Morgan, Sequoia Capital, IndexVentures and having financial biggies like Arthur Levitt Jr. (former chairman of the Securities and ExchangeCommission), Sally Krawcheck (former president of BoAsGlobal Wealth and Investment Management group)and Dr. Burton (former dean of Yale School of Management) on their boards have innovated around a fewmodels. The most famous of these disruptive startups are:

1. WealthfrontSilicon Valley based automated investment advice based on risk profile, with a low feeof up to 25 bps. They recently crossed $ 1 Billion in AUM and have raised over $65 Million (referenceTechCrunch: http://techcrunch.com/2014/04/02/automated-investment-service-wealthfront-raises-35m-from-index-ribbit-capital/)

2. Motif Investing This biggie startup, which has already raised over $ 121 Million from strategic

investors like Goldman Sachs is disrupting the likes of Blackrock. The online brokerage allowsinvestors to build stock and bond portfolios based on everyday ideas and broad economic trendsandshare those ideas with friends. They were ranked the 4

th most disruptive startup in 2014 by CNBC

(reference TechCrunch:http://techcrunch.com/2013/04/12/motif-investing-gets-25m-series-c-goldman-sachs/)

3. Personal Capital Backed by Blackrock and with a funding of above $ 54 Million, it provides a fullfinancial service online with a host of its own wealth managers, taking on Fidelity and Schwab in thelarge market of individually managed investable assets a $32 trillion dollar market in the UnitedStates. (reference TechCrunch: http://techcrunch.com/2013/06/05/personal-capital-closes-25-million-in-series-c-funding-for-online-wealth-management-platform/)

4. NutmegUK based startup funded by Balderton Capital and offering investment management for themasses. Nutmeg offers portfolio management services to anyone with as little as 1,000 to invest. Itnow has over 35,000 registered users and claims its customer acquisition in Q1 was 350% up on lastyear and is already in the top 25 of wealth managers in the UK (reference TechCrunch:http://techcrunch.com/2014/06/25/nutmeg-raises-another-32m-to-disrupt-wealth-management-startup/)

5. E-ToroA European startup with a very big social angle and believing in crowds wisdom and mirrortrading. It is an investment network that uses real-time features to let users follow and trade based onother users activities. They already have over 2 million users (reference TechCrunch:http://techcrunch.com/2012/03/13/social-investment-network-etoro-is-picking-up-another-15-million-from-spark-others/)

Below is a more detailed list of startups which have been funded in this domain globally:
https://www.bcgperspectives.com/content/articles/financial_institutions_growth_global_wealth_2013_maintaining_momentum_complex_world/https://www.bcgperspectives.com/content/articles/financial_institutions_growth_global_wealth_2013_maintaining_momentum_complex_world/https://www.bcgperspectives.com/content/articles/financial_institutions_growth_global_wealth_2013_maintaining_momentum_complex_world/http://www.pwc.com/gx/en/asset-management/publications/pdfs/pwc-asset-management-2020-a-brave-new-world-final.pdfhttp://www.pwc.com/gx/en/asset-management/publications/pdfs/pwc-asset-management-2020-a-brave-new-world-final.pdfhttp://www.pwc.com/gx/en/asset-management/publications/pdfs/pwc-asset-management-2020-a-brave-new-world-final.pdfhttp://techcrunch.com/2014/04/02/automated-investment-service-wealthfront-raises-35m-from-index-ribbit-capital/http://techcrunch.com/2014/04/02/automated-investment-service-wealthfront-raises-35m-from-index-ribbit-capital/http://techcrunch.com/2014/04/02/automated-investment-service-wealthfront-raises-35m-from-index-ribbit-capital/http://techcrunch.com/2013/04/12/motif-investing-gets-25m-series-c-goldman-sachs/http://techcrunch.com/2013/04/12/motif-investing-gets-25m-series-c-goldman-sachs/http://techcrunch.com/2013/04/12/motif-investing-gets-25m-series-c-goldman-sachs/http://techcrunch.com/2013/04/12/motif-investing-gets-25m-series-c-goldman-sachs/http://techcrunch.com/2013/06/05/personal-capital-closes-25-million-in-series-c-funding-for-online-wealth-management-platform/http://techcrunch.com/2013/06/05/personal-capital-closes-25-million-in-series-c-funding-for-online-wealth-management-platform/http://techcrunch.com/2013/06/05/personal-capital-closes-25-million-in-series-c-funding-for-online-wealth-management-platform/http://techcrunch.com/2014/06/25/nutmeg-raises-another-32m-to-disrupt-wealth-management-startup/http://techcrunch.com/2014/06/25/nutmeg-raises-another-32m-to-disrupt-wealth-management-startup/http://techcrunch.com/2012/03/13/social-investment-network-etoro-is-picking-up-another-15-million-from-spark-others/http://techcrunch.com/2012/03/13/social-investment-network-etoro-is-picking-up-another-15-million-from-spark-others/http://techcrunch.com/2012/03/13/social-investment-network-etoro-is-picking-up-another-15-million-from-spark-others/http://techcrunch.com/2012/03/13/social-investment-network-etoro-is-picking-up-another-15-million-from-spark-others/http://techcrunch.com/2012/03/13/social-investment-network-etoro-is-picking-up-another-15-million-from-spark-others/http://techcrunch.com/2014/06/25/nutmeg-raises-another-32m-to-disrupt-wealth-management-startup/http://techcrunch.com/2013/06/05/personal-capital-closes-25-million-in-series-c-funding-for-online-wealth-management-platform/http://techcrunch.com/2013/06/05/personal-capital-closes-25-million-in-series-c-funding-for-online-wealth-management-platform/http://techcrunch.com/2013/04/12/motif-investing-gets-25m-series-c-goldman-sachs/http://techcrunch.com/2013/04/12/motif-investing-gets-25m-series-c-goldman-sachs/http://techcrunch.com/2014/04/02/automated-investment-service-wealthfront-raises-35m-from-index-ribbit-capital/http://techcrunch.com/2014/04/02/automated-investment-service-wealthfront-raises-35m-from-index-ribbit-capital/http://www.pwc.com/gx/en/asset-management/publications/pdfs/pwc-asset-management-2020-a-brave-new-world-final.pdfhttps://www.bcgperspectives.com/content/articles/financial_institutions_growth_global_wealth_2013_maintaining_momentum_complex_world/


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Asia and IndiaA virgin market and the next frontier for funding

The Middle Class (investible assets of $10K to $100K) and Mass Affluent in Asia (investible assets of $100K to

$1 Mn) currently comprise a market of over 560 Mn people, which is set to grow to over 1.75 Billion by 2020.With wealth creation and savings rate in these segments growing, there is an increasing need for simple, trust-worthy investment options, which can be easily executed on. However, most mainstream investment advisory,wealth management solutions or trading providers cater only to sophisticated/ high network clientele or offercomplicated/opaque products. Privatebanking industry in Asia over the last 15 years has been about sellingover-priced products with big margins and limited transparency. As a result of this approach, bankers across theindustry have generally not been able to cultivate the skills to sell real wealth management.Coupled with this, alot of clients donttrust the banks (reference:Hubbis Report).

Closer home, total individual wealth in India was ~ $ 3.4 Trillion in 2013 out of which $ 1.9 Trillion was infinancial assets. However, while cash and savings deposits comprise 25% of financial assets, MFs compriseonly 3% and FDs/Bonds comprise 23% and Direct Equity comprises 22%. Hence the potential for wealthmanagement advisory solution is huge but untapped as of today (reference:Karvy India Wealth Report 2013).

Consequently, we anticipate wealth management disruption by startups to percolate down to India and Asia aswell.

Early movers in this are already making inroads, however competition is still very limited. And VC funds areactively focusing on these select high quality opportunities in Asia. One such startup is TradeHero based out ofSingapore which lets people play stock markets using gamification models. TradeHero raised $10 Million in2013 from KPCB and IPV Capital. Another interesting startup which is seeking to change wealth managementadvice and investments distribution in India is InvestEaze set up by Delhi based company Info Assembly Pvt.Ltd.. Started by three IITians (2 are from IIT Delhi and one from IIT Roorkee), InvestEaze leverages a

proprietary platform to provide online, simple to use, goal-based investment choices that are socially proofed bya network. The founders who have over 20 years of trading, capital raising and investing experience across theUS and Asia at PIMCO, O3 Capital and McKinsey have leveraged their personal experience onto combininginnovative financial models and product curation into a social platform. The founders call it the Facebook of

Investments. Their unique launch page athttp://investeaze.com/received nearly 700 signups within one weekof launching. Already funded by ARK in the US and one of the showcases at the upcoming Techcircle
http://www.hubbis.com/TheGuideToWealthManagementInAsia2013.phphttp://www.hubbis.com/TheGuideToWealthManagementInAsia2013.phphttp://www.hubbis.com/TheGuideToWealthManagementInAsia2013.phphttp://www.karvywealth.com/reports/India_Wealth_Report/?title=India-Wealth-Report-2013http://www.karvywealth.com/reports/India_Wealth_Report/?title=India-Wealth-Report-2013http://www.karvywealth.com/reports/India_Wealth_Report/?title=India-Wealth-Report-2013http://investeaze.com/http://investeaze.com/http://investeaze.com/http://investeaze.com/http://www.karvywealth.com/reports/India_Wealth_Report/?title=India-Wealth-Report-2013http://www.hubbis.com/TheGuideToWealthManagementInAsia2013.php


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7/19/2014 The future of wealth management services - FT.com

http://www.f t.com/intl/cms/s/0/cd144564-6986-11e2-8d07-00144feab49a.html?siteedition=uk#axzz37uL2LI9Y

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January 28, 2013 8:31 pm

The future of wealth management servicesBy Srini Venkateswaran and Kunal Vaed

Wealth managers are under pressure to rev up their profits. Over the past several years revenues have been sluggish, margins tighter,

and costs - particularly those involving regulatory compliance - higher.

At the same time, clients are demanding more from their wealth managers, their expectations fed by the technology-enhanced customer

experience they have grown accustomed to receiving from innovative organisations such as Amazon and Apple.

To succeed in the decade ahead, established wealth management companies will need to leverage technology in much the same way that

their cutting-edge counterparts have in other industries.

This means embracing a digital approach to doing business that is online, mobile, social, real-time, and 24/7. Getting there will mean

rethinking just about everything, from how they interact with clients to how they conduct business in the back office. And they must

embrace digitisation in ways that complement the expertise of financial advisors and private bankers, especially for the ultra-rich.

What will this digitised wealth management firm look like? Four overarching imperatives stand out.

First, itwill behyper-connected and provide high-speed access to portfolio information through mobile channels. It will also be context

aware, using big data analytics to deliver personalised advice to clients. Third, it will be collaborative, offering clients social platforms

to engage with other clients and advisors. And, finally, it will be untethered, using cloud computing to reduce infrastructure costs. Lets

lookat a fewconcrete examples.

Improving client acquisition

Most wealth management firms rely on using advisors as their largest channel for sourcing new clients. However, digital technologies

offer other new avenues for finding valuable customers.

Potential clients searching for direction in a post-crisis world awash in social media are increasingly inclined to lean on the collective

thinking of their peers - whether they are choosing a wealth advisor or buying into a mutual fund. Forward-thinking wealth managers

are starting to leverage this insight.

Ameriprise is offering prospective clients the ability to search for new advisors on its website, and find out if anyone in the clients

LinkedIn network knows these advisors; Morgan Stanley enables its advisors to engage with prospective clients on LinkedIn by sharing

research.

These offerings allow prospective clients to draw on the wisdom of their peers, and they also establish a heightened level of credibilityfor the firms that create these opportunities.

Rethinking advice

We have already seen some investment advice being digitised, with wealth managers offering retirement calculators and basic financial

planning tools to clients online. However, usage rates remain low due to the tools non-intuitive design, their lack of a clear call to

action, and the limitations that most wealth managers impose on them.

For example, many wealth management firms offer digitised advice only on their own products and services. Contrast that with the

transparent advice model employed by Progressive in the auto insurance industry. It lets customers compare rates and features for the

companys policies directly with those of its competitors.

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7/19/2014 The future of wealth management services - FT.com

http://www.f t.com/intl/cms/s/0/cd144564-6986-11e2-8d07-00144feab49a.html?siteedition=uk#axzz37uL2LI9Y

Wealth managers who have products, services, and pricing capable of withstanding that sort of scrutiny - and who would be will ing to

make it easy for clients to undertake that level of scrutiny - could change the equilibrium of their industry by allowing and fostering it.

Digital technologies have already started to demystify the art of financial advice, by offering automated advice bundles based on a quick

assessment of the investment objectives of clients. Startups like WealthFront and Personal Capital, as well as established companies

like Schwab, are increasingly offering tailored advisory services for a fee. In the meantime, wealth managers also need to make their

electronic advice services quicker, simpler, and less demanding of clients.

One new player company in that direction is SigFig, an independent Web-based service that links to users financial accounts and then

automatically alerts users to underperforming investments and hidden or exorbitant costs in their portfolios. An example of its focus on

efficiency? The time required to complete the online tour SigFig uses to introduce potential users to its service: 30 seconds.

Enhancing client experience

The tablet channel is going to be one of the most important ways of reaching the affluent client and building connectivity between the

advisor and client. Most wealth management firms are just scratching the surface with todays tablet applications, which enable clients

to manage their portfolios, review reports, and enter trade orders while on the go.

The next generation of tablet-based applications will be highly collaborative, offering lifelike interactions with financial advisors and

specialists through video and holography, interactive financial planning applications, rapid account opening processes, and secure

exchanges through biometric electronic signatures.

Bettering the back office

For all the potential benefits of digitising the customer interface, that is not actually where wealth management firms will realise the

greatest value from digitisation. That will happen in the back office, where technology can be leveraged to improve workflow and

minimise manual operations in areas such as account opening, trade execution and settlement, and compliance.

Many wealth management firms remain surprisingly behind the curve in these areas. For proof, just visit the back office of a major

mutual-fund company and see how many people are involved in setting net asset values for their funds at the close of each trading day.

Savings achieved in back-office operations can help to fund the enhancements firms want and need to offer to customers in the front end

of their operations. Back-office improvements can also help wealth managers achieve front-end objectives directly, in areas such as

client acquisition, by facilitating streamlined processes and procedures.

Right now, it can take just 30 minutes to open an account at a discount brokerage firm. At a traditional wirehouse, escorting a newclient from initial interaction to completion of the process might take 30 days.

No one is suggesting that the trusted, experienced, individual advisor who has long been the key to client relationships is going to

disappear, or that he or she should. Many clients still value the opportunity to meet face-to-face with an advisor when they feel it is

appropriate.

Still, the individual advisor alone is no longer enough. Clients today want access to information when, where, and how it makes sense

for them, whether in an annual meeting with their advisor, in a quick check of their portfolio on a tablet computer, via an actionable

alert sent to their smartphone, or in online discussions with their peers.

Wealth management firms that can deliver this entire spectrum of experiences will be best positioned to prosper in the decade ahead.

Srini Venkateswaran is a partner and Kunal Vaed is a principal in Booz & Companys financial services practice.

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7/19/2014 Automate d Investme nt Se rvic e Wea lthfront Ra ise s $35M From Index, Ribbit Capital | Te chCrunch

http://techcrunch.com/2014/04/02/automated-investment-service-wealthfront-raises-35m-from-index-ribbit-capital/

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Financial services as an industry is a sector that is rapidly being disrupted from all

directions. One of the startups helping to lead the pack is Wealthfront, an automated

investment firm that serves as an alternative to traditional financial advisory services like

Fidelity. Today, the company is announcing $35 million in new funding led by Index

Ventures and Ribbit Capital with existing investors The Social+Capital Partnership,

Greylock Partners and DAG Ventures participating, weve learned exclusively. Also joining

this round are Marissa Mayer, Kevin Rose, Paul Kedrosky, Mark and Ali Pincus, AlisonRosenthal and Tim Ferris. This brings the companys total funding to $65 million.

The brainchild of former Benchmark Capital founder Andy Rachleff, Wealthfront launched

in 2011to give anyone access to the type of financial planning that would normally only b

available in private wealth management shops of Goldman and others. Rachleff brought

on former LinkedIn product VP Adam Nash as COO in 2012, and handed over the CEO

reinsto Nash earlier this year.

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Automated Investment Service Wealthfront Raises $35MFrom Index, Ribbit Capital

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After two and a half years of operation, Wealthfront is now managing $800 million in

assets, making it the largest and fastest-growing software-based financial adviser.

To put that number into perspective, Wealthfront began in 2013 with just $100 million

assets under management, growing over 450 percent in just one year. It took Wealthfront

almost a year to reach $67 million in assets under management, and in the first quarter

alone, the company added over $250 million in assets managed.

For background, Wealthfront goes beyond just automating investing the companys

fees are set up to undermine the models of incumbent investment services like Fidelity,

Charles Schwab, and any other mutual fund investor or financial adviser. It also comes

with features like tax-loss harvesting for any account worth at least $100,000. If you make

a profit on parts of that accounts portfolio, itll reinvest it and avoid taxes on the gains by

doing so.

The company says its clients vary in age between 19 and 93, with over 55 percent of users

under age 35. The average Wealthfront client invests $80,000 to $100,000, but the

minimum continues to be $5,000. Wealthfront now provides service to clients across all 5

states and Washington, D.C., with client accounts ranging in size from $5,000 to over $10

million. Additionally, Wealthfront is free for accounts under $10,000, and 20 percent of

Wealthfront clients have a liquid net worth of less than $50,000. Over 16 percent of clients

liquid net worth is in excess of $1 million.

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Unsurprisingly, the client base tends to be tech-heavy. The companies where Wealthfront

has the most clients are, in order, Google, Facebook, LinkedIn, Microsoft, Twitter, Palantir

VMware, Apple, Intuit and Cisco. But whats interesting is that there are also many lawyers

financial professionals, teachers, doctors and even military that Wealthfront counts as

clients.

Where is this growth coming from? Nash says that the company has done some

advertising online but for the most part, growth has been word of mouth. (And it should

be noted that the company brought on former Facebook, Twitter and Quora growth

expert Andy Johns, as well). This steady growth is perhaps why investors, existing and new

are betting on the service to disrupt financial planning the way Charles Schwab did

decades ago.

In fact, Nash draws a lot of comparisons to what Schwab did and what Wealthfront is

doing. As he explains, Wealthfront is doing today for Millennials what Charles Schwab did

for the Baby Boomers. Schwab launched in the 1970s and its early customer base

consisted of people in their 30s with smaller accounts. Schwab now manages $2.2 trillion

and its average client is in their 50s with over $200,000 invested with the service. Just as

Schwab grew up with the Baby Boomer generation, Wealthfront wants to grow up or

scale with the Millennials and Gen Y, which represent more than 90 million people in the

U.S.

Nash says that Millennials currently have a liquid net worth of $1 trillion and their

estimated net worth is predicted to grow to $7 trillion by 2025, demonstrating a fairly

large market to go after.

Wealthfront serves this generation better than others because many of these

professionals like the idea of an automated service that they dont have to worry about.

Features like tax-loss harvesting and general tax efficiency based on asset level save

people time. Our goal is to help make investing simple for people to do the right thing,and help make this automatic so they do the right thing for the long-term, Nash says.

Index actually led the companys previous round of funding in 2013, and as Index

Ventures partner Mike Volpi says, We didnt have enough of something we thought was

super exciting. Normally when all or most existing investors put money into a round, it

could be perceived as a negative signal. Not the case here, says Volpi. We wanted to own

more of the company.
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One of the things that Wealthfront has been able to do with relative ease is create trust

among users, Volpi adds. It takes a long time to establish trust, but once you create this,

people dont leave. Especially with finances, people want to sleep well at night and know

their money is being managed well. Thats what Wealthfront represents, but with a

modern twist, he says.

Volpi actually knows this industry very well his father worked in private wealth

management for UBS. When Volpi told him about the idea with Wealthfront, his fathers

response was that he was fortunate he retired early because he could easily see how

Wealthfront could disrupt his business.

Another area where Wealthfront has been devoting time is in resources. The company

has a blog that creates helpful content around subjects like your 401(k),post-IPO share

strategiesand more. In fact, Wealthfront has been working to personalize the experience

more, especially on mobile, where the startup will serve your tailored content specific to

your needs.

Personalization is at the forefront of the future product vision, and Nash says there will b

more to come. Wealthfront is fairly lean with only 35 employees, so the company will be

adding engineering and design talent in the coming year. Most importantly, Nash and his

team are focusing on adding new users and delighting customers, which has been his

goal from the start of 2014. And the product will continue to evolve based on customerneeds and concerns, he adds.

Its important to note that there are a number of competitors in the space who are

looking to become the next-generation financial advisory platform of choice, including

Betterment, Personal Capital, and SigFig. And taking on dinosaurs like private banks and

even companies like Fidelity is ambitious to the say the least. But with trillions of dollars in

assets at stake, there is room for many players in the online wealth management space.

And as technology companies (with an eye for design) continue to disrupt traditionalverticals like transportation, hospitality and health, financial services is going to have its

own Ubers and Airbnbs of the world. Wealthfront could be that company.
http://techcrunch.com/2012/02/06/wealthfront-allows-tech-company-stock-holders-to-test-share-sale-strategies-post-ipo/


10/23

7/19/2014 Motif Ge ts $25M Series C Led By Goldman Sachs For Its Theme-Based Stock Investment Pla tform | TechCrunch

http://techcrunch.com/2013/04/12/motif-investing-gets-25m-series-c-goldman-sachs/

News TCTV Events

Bitcoins may be getting a lot of buzz, but the

market for products that deal with old

fashioned dollars and cents is apparently sti

strong.

To wit: Motif Investing, the Silicon Valley

startup headed up by Microsoft alum

Hardeep Waliathat lets people invest their

money in themed groups of stockscalled

motifs, has raised $25 million in a new

round of funding led by Goldman Sachs.

This counts as a Series C round for Motif, bringing the total amount of money invested in

the company to $51 millionsince it was founded in mid-2010. All of Motifs previous

investors, including Ignition Partners, Norwest Venture Partnersand Foundation Capital,

also pitched into this new round. As part of the investment Darren Cohen, Goldmans

managing director of principal strategic investments, is joining Motifs board as an

observer.

In an interview this week, Walia told me that Motifs growth has been strong since it

officially launched its platform to the public last summer. To date more than 7500 motifs

have been created,whichare investment indexes that let people invest in genres such asBiotech Breakthrough or Housing Recovery as opposed to buying individual stocks or

putting complete trust in a mutual fund or ETF.

Motif, which Walia bills as a Facebook meets eTrade meets Mint.com, does not collect

management fees, which is another thing that sets it apart from traditional money

management vehicles. It makes money by charging a flat $9.95 fee to make a motif (which

can include up to 30 stocks) and in several other ways, such as collecting margins on

6 Tweet 260

Posted Apr 12, 2013 by Colleen Taylor(@loyalelectron)

Motif Gets $25M Series C Led By Goldman Sachs For ItsTheme-Based Stock Investment Platform

106Share Share 80
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11/23

7/19/2014 Motif Ge ts $25M Series C Led By Goldman Sachs For Its Theme-Based Stock Investment Pla tform | TechCrunch

http://techcrunch.com/2013/04/12/motif-investing-gets-25m-series-c-goldman-sachs/

investments and selling value-added services and products. In the months since launch,

the platform has attracted a diverse user base ranging from ultra high-net-worth

individuals who primarily appreciate that Motif does not charge management fees, to

newbie investors who appreciate the sites natural language approach, Walia says.

With the fresh Series C funds, Walia says that Motif will work on further developing its

product for financial advisors, which will let professional consultants use Motifs

investment platform with their own clients. There are other new products in the works, as

well, he says. Motifs own staff, meanwhile, has grown to 40 full-time employees, and the

funding will also be used to continue to add talent (with a special focus, not surprisingly,

on engineering.)

When asked about strategic options after all, Goldman Sachs doesnt exactly invest in

companies without an eye on getting a return Walia said that hes focused on building

Motif as a company that lasts and is independent, so that we can continue to disrupt this

space.

That said, Walia, whose resume includes time on the M&A team at Microsoft, did

acknowledge that Motif could make sense as an acquisition target, especially for

established entities that deal in ETFs, stock brokering, and financial services. A lot of

people have found what we do quite fascinating we are very attractive to certain

players. For now, though, Motif certainly has the vision and funding necessary tocontinue to grow as a standalone entity, and it should continue to be one to watch at the

intersection of finance and technology.


12/23

7/19/2014 Nutmeg Raises Another $32M To Disrupt Wealth Management Startup | TechCrunch

http://techcrunch.com/2014/06/25/nutmeg-raises-another-32m-to-disrupt-wealth-management-startup/

News TCTV Events

Nutmeg, the UK-based online investment management startup, intends to disrupt the

world of financialinvesting by making it affordable for the masses. But to do that it needs

cash. Lots of cash. Today theyve raised another $32 million, taking their total funds raised

to $50m. To put that in perspective, WealthFrontin the US has raised $65.5M, while

Bettermenthas raised $45M to enter this market.

The investors in todays round include Carphone Warehouse founder Charles Dunstone

(pictured, on left), asset management house Schroders, and top-tier European VC

Balderton Capital. Existing investors include Draper Associates and Daniel Aegerter from

Armada Investment Group also participated. The new funds will be spent on customer

acquisition and product development. Tim Draper calls Nutmeg among the very best of

exciting new financial technology businesses.

1 Tweet 169

Posted Jun 25, 2014 by Mike Butcher(@mikebutcher)

Nutmeg Raises Another $32M To Disrupt WealthManagement Startup

352Share Share 129
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7/19/2014 Nutmeg Raises Another $32M To Disrupt Wealth Management Startup | TechCrunch

http://techcrunch.com/2014/06/25/nutmeg-raises-another-32m-to-disrupt-wealth-management-startup/

Nutmeg offers portfolio management services to anyone with as little as 1,000 to invest.

It now has over 35,000 registered users and claims its customer acquisition in Q1 was

350% up on last year and is already in the top 25 of wealth managers in the UK. In the UK

this market is worth 500 billion, and while traditional investment managers pay 1.36

percent commission in fees, Nutmegs charges start at 1 percent and go as low as 0.3

percent.

Founded by Nick Hungerford (pictured, on right) originally raised from Draper Associates

after his Stanford MBA. He joined with co-founder William Todd, a former derivatives

expert. Hungerford was previously an investment manager at Brewin Dolphin.

In 2012 Nutmeg raised $5.3 million from Pentech, Draper, Spotify board member Klaus

Hommels and Armada Investment Group chairman Daniel Aegerter.

Hungerford told me the big capital raise was necessary to bring Amazon-like levels ofcustomer service to an industry where customers are routinely charged huge fees for

visiting a plus office once a year.

Competitors in Europe are thin on the ground and we are only aware ofVaamoin this

area.

Schroders executive chairman Massimo Tosato will take a seat on Nutmegs board.
https://www.vaamo.de/


14/23

7/22/2014 Upside Raises $1.1M To Help Investment Advisers Compete Against Wealthfront, Betterment And Co. | TechCrunch

http://techcrunch.com/2014/07/14/upside-r aises-1-1m- to-he lp- investment- advise rs- compete -aga inst-wealthf ront-be tte rment- and-co/

ANNOUNCEMENT Tickets for the TechCrunch summer party at August Capital are now on sale.

News TCTV Events

In the world of personal finance, robo-advisers like Betterment, Wealthfrontand

FutureAdvisorare all the rage now. They invest your money in low-fee index funds for you

and reshuffle your portfolio as necessary. Thats a problem for the 10,000 or so

Tweet 136

Posted Jul 14, 2014 by Frederic Lardinois(@fredericl)

Upside Raises $1.1M To Help Investment Advisers Compete

Against Wealthfront, Betterment And Co.Share 0
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investment advisers in the U.S. that are registered with the SEC, however. Younger

investors may not go to them, but use a web-based service instead.

Upside, which today announced that it has raised a $1.1 million funding round led by

Cultivation Capital, give these advisers a white label solution thats very similar to what

other robo-advisers offer. Prior to this round, the company participated in the St. Louis-

based financial tech-focused SixThirtyaccelerator. Other investors in this round

include SixThirty and a number of angel investors, including Suranga Chandratillake

(General Partner at Balderton Capital), Elaine Wherry (co-founder at Meebo, acquired by

Google), Bruno Bowden (Equity Partner at Data Collective), Noah Tutak (former CEO of

Geni and co-founder & CEO of Swim), and Sean Kell (CEO of A Place For Mom, a Warburg

Pincus company).

The service was founded by Tom Kimberly, who has background in retail financial services

and M&A, andJuney Ham, the former director of online marketing for Airbnb. As they told

me last week, they started the service in 2013 with the idea to compete withBetterment

and Wealthfront. What they realized, however, was that customer acquisition was very

costly. Indeed, Kimberly argued that it would take many of these services between three

and four years to break even on a new customer. None of these competitors, however,

were going after the existing base of investment advisers who already service a huge

number of clients and who are already aware of the threat these services pose to their

future business. These advisers have millions of clients and manage billions of dollars in

assets already. They also know that younger client my bypass them completely.

Its pretty clear that from a generational perspective that younger clients are

systematically underserved in the market today, Kimberly told me. There is a huge

amount of people and assets that are underserved by the status quo.

Kimberly told me that when they started talking to advisers, it became clear that there

was a huge market for a Wealthfront-like service for advisers. Most advisers set certainlower limits for their clients (often a million or half a million dollars), but at the same time

they dont want to turn away business, either, and somebody who only has a quarter

million to invest today may have half a million in a few years.

Just like in most businesses, advisers make eighty percent of the revenue comes from the

top twenty percent of customers, so by being able to help their relatively low-value clients

manage their assets through Upsides white-label solution, they get to improve their
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margins for this group of clients.

Upsides default investment strategyis similar to that of other robo-advisory services in

that it mostly focuses on low-fee index funds and bond ETFs that are allocated according

to a clients age, expected retirement age and willingness to take financial risks. Advisers

can also tweak these strategies, though, and use their own model portfolios. Advisers get

a white-labeled portal for their clients and can then be as hands-on or hands-off as they

want to be. Upside takes a 0.25% fee for its services and advises its partners to charge les

than a 1% fee for their services in total.

Looking ahead, Kimberly and Ham tell me, the company plans to invest its current funding

to expand the companys mostly engineering-focused staff of eight with a larger sales and

marketing group that can help it fuel its growth and reach more advisers quickly. The

company, of course, will also use these funds to continue to evolve its current product.

One thing they co-founders to not expect, however, is to go back into the direct-to-

consumer space. We dont want to compete with advisers we want to partner with

them, Kimberly said.

Upside got some early validation for its service recently, too. Shareholders Service Group

a broker/dealer basin in San Diego that provides brokerage services to over 1,200

advisers across the U.S. recently partnered with the company and the company has been

talking to some of the major online trading service, too.
http://www.upsideadvisor.com/home/strategy


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7/22/2014 Singapore App Maker MyHero Raises $10M Series A For Its Stock Market Trading Gamification App, TradeHero | TechCrunch

http://techcrunch.com/2013/09/26/tradehero-series-a/

ANNOUNCEMENT Tickets for the TechCrunch summer party at August Capital arenow on sale.

News TCTV Events

An app that lets people play the stock

market without the risk of losing any real

money has turned its virtual cash game

into a pile of actual Benjamins, by closing

out a $10 million funding round one ofthe largest Series A rounds for a

consumer startup in the region, it claims.

The app in question, TradeHero, is made

by a Singapore-based developer

MyHero. Investors in the round are Kleine

Perkins Caufield Byers China fund(KPCB

China) and IPV Capital.

TradeHero users start out with $100,000

in virtual cash to spend, choosing which

and how much stock to buy there are

no live trades going on here, its a

simulation and getting to see whether

their trading decisions would have panned

out IRL because the app follows actual

market movements.

Dinesh Bhatia, CEO and Founder of

MyHero Ltd, the holding company for

the TradeHero iOS app, describes it a

financial literacy tool that uses gamification to engage users and help them learn how to

12 Tweet 367

Posted Sep 26, 2013 by Natasha Lomas(@riptari)

Singapore App Maker MyHero Raises $10M Series A For Its

Stock Market Trading Gamification App, TradeHeroShare 0
https://itunes.apple.com/us/app/tradehero-mobile/id572226383?mt=8http://www.crunchbase.com/financial-organization/ipv-capitalhttp://www.kpcb.com/focus/chinahttp://www.crunchbase.com/company/tradeherohttps://twitter.com/riptarihttp://techcrunch.com/author/natasha-lomas/http://twitter.com/search?q=http%3A%2F%2Ftechcrunch.com%2F2013%2F09%2F26%2Ftradehero-series-a%2Fhttps://twitter.com/intent/tweet?original_referer=http%3A%2F%2Ftechcrunch.com%2F2013%2F09%2F26%2Ftradehero-series-a%2F&text=Singapore%20App%20Maker%20MyHero%20Raises%20%2410M%20Series%20A%20For%20Its%20Stock%20Market%20Trading%20Gamification%20App%2C%20TradeHero&tw_p=tweetbutton&url=http%3A%2F%2Ftechcrunch.com%2F2013%2F09%2F26%2Ftradehero-series-a%2F%3Fncid%3Dtwittersocialshare&via=techcrunchhttps://itunes.apple.com/us/app/tradehero-mobile/id572226383?mt=8http://www.crunchbase.com/financial-organization/ipv-capitalhttp://www.kpcb.com/focus/chinahttp://www.crunchbase.com/company/tradeherohttp://techcrunch.com/events/http://techcrunch.com/video/http://techcrunch.com/http://techcrunch.com/http://techcrunch.com/events/august-capital-party-2014/event-home/


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improve their trading.

Its part fantasy football style game, part trading learning tool, part stock market tip

resource the latter aspect because TradeHeros most successful traders become part

of a leaderboard that other users can pay to follow so they get the inside track on their

(successful) trading decisions (leaderboard members also share in these winnings

giving them an incentive to keep virtually trading on TradeHeros platform).

Has TradeHero made Bhatia a better trader? I ask because he got the idea for the app

after losing a lot of money on the stock market by betting on Palms webOS

rebirth. Oops It has, he says. If you followed me [on TradeHero] Im up 50% from

January this year when the app launched. The market has been good this year, but still

thats pretty good. But Im nowhere near the top [of the TradeHero leaderboard]. Ergo,

theres still lots to learn.

Other aspects of TradeHeros business model include in-app purchase options, to

monetise engaged users by offering them things like the ability to buy more virtual

cash so they can increase their liquidity, or the ability to reset their portfolio entirely so

they start again afresh. TradeHero also has a b2bc revenue stream via tie-ins with

financial companies wanting to reach an engaged community of users provided

whatever theyre trying to get access is relevant to its audience, says Bhatia.

Most of our [learn how to play the stock market] rivals do live trading [such as the eToro

social network]. We are more about monetising off the information brokerage. In a way

were focusing on the research we can call it micro-research which is user-

generated rather than focusing on the trading. These are tips that you can then use,

once you subscribe to TradeHero to actually bridge the gap to live trading, and hopefully

make better decisions, he adds.

So now its landed a $10 million Series A, what does MyHero intend to do with the money?

Bhatia says it plans to spend the funding on a big marketing push for TradeHero over the

next 18 to 24 months. The app launched seven months ago, and has since built up a user

base of around 280,000 three-quarters of whom he says are active on a bi-monthly

basis, emphasising that those figures have been achieved working with relatively limited

resources.

TradeHero was actually incubated out of TNF Ventures, taking in a seed round of around
http://www.tnfventures.com/site/portfolio/http://techcrunch.com/2011/08/09/the-lonesome-death-of-webos/


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+

+

+

$500,000-$600,000 about a year ago, with backing from Singapores National Research

Foundation. Landing such large follow-on funding will allow it to ramp up its marketing

efforts on several fronts, he says, including targeting user-acquisition effects at markets

such as the U.S. and Europe which it hasnt really had the firepower to focus on to-date.

Its also planning to translate the app into more languages to help grow its reach further.

Markets where TradeHero has been getting traction to-date include Asia and South

America, with Bhatia specifically singling out Thailand, Singapore, India, Mexico,

Vietnam and also the U.S. as places where its garnered a following. TradeHero is

available in more than 200 countries. Weve been number one in the finance category on

the iOS App Store in 75 countries. And top 10 in about 100 countries right now, he adds.

Part of the new funding will go on ramping up the startups headcount, to support its

marketing efforts and market growth push. In the latter area, China will be a key focus

over the next three to six months. Weve got our sights on China. China has a lot of onlin

accounts, brokerage accounts. The interest is potentially very, very high in something like

this, he says. We have tried and tested in markets like Hong Kong, Singapore and Taiwan

where the mindset is very similar. China is a very, very big market for us.

The Series A round is actually double the amount TradeHero has previouslysaidit was

aiming to raise this year. Expect the extra money to go towards a new, presumably

complementary app although Bhatia wont comment specify on what its working onyet.

But fuelled by at least some of that $10 million and the addition of an Android app to

expand TradeHeros mobile platform reach this time year he says hes hoping the app

will have amassed a user-base thats in the couple of millions. Weve done close to

300,000 users now with seven staff, with a very limited budget, with just iOS. Im very

confident that we can hopefully be in the two to four million user range, he adds.

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7/19/2014 CNBC Disruptor 50

http://www.cnbc.com/id/101734664

Revealed: The CNBC Disruptor 50 List

The List:Disruptor 50 1-5 of 50Start Over |

2014 CNBC's Disruptor 50 18KSHARES

COMMENTS Join the Discussion

In the second annual Disruptor 50 list, CNBC features private companies in 27 industriesfrom aerospace to enterprise software to

retailwhose innovations are revolutionizing the business landscape. These forward-thinking upstarts have identified unexploited

nichesin the marketplace that have the potential to become billion-dollar businesses, and they rushed to fill them. In the process,

they are creating new ecosystemsfor their products and services. Unseatingcorporate giants is no easy feat. But we ranked those

venture capitalbacked companiesdoing the best job. Alreadyit's hard to think of the world without them. Read more about the list

rankingand the methodology.

1SpaceX The company that wants tosend you to space and colonize Mars.

2 Warby Parker Taking on the Luxottica eyewear machine.

3 Etsy A big voice for small artisans.

4 Motif Investing Building theme-based portfolios online.

5Palantir Technologies Silicon Valleys CIA operative.

6 GitHub Cracking the code on collaboration.

7 Aereo The company TV hopes will die.

8 Moderna Therapeutics Reprogramming cells to fight disease.

9 Spotify The most controversial act in music.

1. SpaceX 2. Warby Parker 3. Etsy 4. Motif Investing 5. Palantir Technologies

8
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10 Uber The 21st-century taxi service.

11 Zuora A renewal in the subscription business model.

12 ChargePoint Putting the gas station out of business.

13 Dataminr The search for intelligence on Twitter.

14 Skybox Imaging The spy who came into the Google fold.

15 Stripe The start-up challenging PayPal.

16 TransferWise Getting bankers out of the forex biz.

17 Personal CapitalA 360-degree view of your finances.

18 Quirky Crowdsourcing an idea for basement tinkerers.

19 Pure Storage Predicting a flash flood of data.

20 Wealthfront Silicon Valleys plan to oust wealth managers.

21 Fullscreen YouTube's hot multichannel talent network.

22 EcoMotors Turning the engine inside out, in Detroit's backyard.

23 Shape Security Putting organized cybercrime out of biz.

24 Dropbox The 800-pound gorilla in the cloud IPO room.

25 Cool Planet Energy Systems From farm to fuel, and back to farm.

26 AngelList Getting disruptors the money they need to disrupt.

27 BrightRoll Betting detergent ads on TV wont wash.

28 Yext Resurrecting the Yellow Pages.

29 DocuSign Sign on the dotted e-line.
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30 Apptio A cloud-based Peter Drucker.

31 Nebula A private cloud the size of a pizza box.

32 Pinterest The world's bulletin board.

33 Lending Club Borrowing without banks.

34 Redfin The only real estate broker who hates commissions.

35 Coinbase The closest thing bitcoin has to a central bank.

36 Hampton Creek Foods The egg comes first; no chicken necessary.

37 Bill.com Making sure the checks never in the mail again.

38 Rent The Runway Nice dress. Can I borrow it?

39 Nexmo How billion-dollar start-ups text.

40 Fon The Airbnb meets Uber and Aereo of Wi-Fi.

41Airbnb The newest idea in room service: renting one.

42 MongoDB Solving humongous data problems.

43 Oscar Health insurance for the Obamacare era.

44 Kumu Networks A much-needed boost for wireless networks.

45 Betterment Robo-advising for the masses.

46 Kymeta Bill Gates next potential blockbuster.

47 Twilio Riding the mobile-app wave.

48 Snapchat The app for selfie photo lovers.
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49 Kickstarter Cashing in from the crowd.

50 Birchbox Free samples, for a price.

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Business Standard - Storyline on VC Funding in Disruptive Models

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