Wealthfront Inc., one of the largest independent digital wealth management startups, just closed a $75 million round of funding to help develop new products for its growing client base.
The company has amassed just over $9 billion in assets under management since launching in late 2011. While it took 13 months for the firm to get its first $100 million in assets under management, it added $100 million yesterday alone, Chief Executive Officer Andy Rachleff said in an interview.
The new round should be “more than enough” to see them through to becoming profitable, he said.
With a client base that skews younger than most online-based advisers — more than three-fourths of customers are under the age of 45 – the firm has made a large push into financial planning since its last funding round in 2014.
It’s also been focusing on investment management and banking services, and Rachleff says Wealthfront plans to “even more aggressively expand into those services than we have in the past.”
The expansion as well as the young customer base was a key selling point to bringing on Tiger Global Management as an investor in the latest funding round.
“Wealthfront’s exclusively software-based model gives the company a superior approach to capture the younger, fast-growing market of investors,” said Lee Fixel, a partner at Tiger Global. “We’re excited to support continued growth of the business and help Wealthfront become to the millennial generation what Charles Schwab is to baby boomers.”
The startup, based in Redwood City, California, declined to comment on valuation, but was previously valued at $700 million when it raised money in 2014, according to CB Insights.
Existing institutional investors also participated in the latest round, including Benchmark Capital, Greylock Partners, Index Ventures, Ribbit Capital, Social Capital and Spark Capital Growth. Rachleff also co-founded Benchmark Capital.
Wealth management startups took off shortly after the financial crisis, capitalizing on the rise of passive investing as well as mobile applications and websites that appealed to millennials in particular.
Last year saw some of the biggest banks and established wealth managers spend millions of dollars on financial technology to transform decades-old offerings, leading to growing competition from the incumbents.
Expansion from other wealth startups is also strong, with Betterment LLC amassing $12 billion since launching in 2010 and closing a financing round in 2017 that saw its valuation hit $800 million.