What You Need to Know
- The fintech companies Benjamin, Andes Wealth Technologies and College Aid Pro pitched to the ScratchWorks investors.
- The investors included Marty Bicknell, CEO of Mariner Wealth Advisors, and The Colony Group’s CEO, Michael Nathanson.
- Scratchworks gave Benjamin and College Aid Pro the thumbs-up but passed on Andes Wealth Technologies despite an impressive pitch.
After an 18-month pandemic delay, ScratchWorks, the wealth management industry’s elite fintech accelerator, finally debuted its Season 4 at the Barron’s Advisor Independent Summit in late March in Louisville, Kentucky.
Three emerging fintech companies took the stage live to make their pitch — “Shark Tank” style — to the luminary investors of ScratchWorks, hopeful for industry fame, valuable connections and most importantly, cold, hard cash to fuel their growth. No doubt these tech entrepreneurs were humming Pink Floyd’s “Money” as they prepared for the main stage.
ScratchWorks connects innovative tech startups with wealth management leaders to advance the digital transformation of the financial services industry. Finalists pitch their companies to a panel of RIA executives with deep pockets and hundreds of billions of dollars in collective assets under management, with the goal of securing an investment for their company.
In the format, finalists have 15 minutes to make their case to the ScratchWorks investors to get a deal — making that pressure-packed stage time likely the most important 15 minutes of their fintech careers.
Season 4 featured a subset of ScratchWorks’ famous investors, including Marty Bicknell, CEO of Mariner Wealth Advisors, and The Colony Group’s CEO, Michael Nathanson. The ability of the ScratchWorks investors to transform the trajectories of fintech startups can be quite dramatic, most notably in the case of Season 1 graduate Robert Sofia and his marketing automation platform, Snappy Kraken.
Sofia turned a $100,000 investment from Bicknell and his co-investors into a multimillion-dollar raise from Bicknell just a few months later to make Snappy Kraken a household name in the advisor marketing technology sector.
Up first was Matt Reiner, CEO of Benjamin, an AI-driven workflow automation engine and business support system that automates over 100 common workflows and tasks to bring efficiencies, scale and cost savings. Through Benjamin’s advanced design, advisory firms can automate much of the client journey from streamlining the prospecting process, simplifying onboarding, coordinating meeting scheduling and preparation, as well as ongoing client engagement and relationship management by synchronizing the RIA and custodian tech stacks.
Reiner opened with a request of $500,000 in exchange for 10% of the company, a valuation that both Bicknell and Nathanson thought was in the ballpark for an emerging firm that had great potential to make inroads into the highly competitive advisor tech space.
They thought, however, that $500,000 was a bit rich for where Benjamin was in its evolution. Reiner backed up his valuation with solid growth numbers, including the fact that Benjamin has a nearly yearlong streak of double-digit quarter-over-quarter growth.
After spirited discussion, Bicknell and Nathanson made a final offer: $250,000 for 10% of the company, subject to agreement from ScratchWorks’ other investors. This offer would be a significant haircut to Reiner’s initial ask; it was clear in Reiner’s mind, however, that having Bicknell and Nathanson and the other investors in ScratchWorks as partners in Benjamin would be transformational for the company.
After a dramatic pause that had the hundreds of advisors in the audience murmuring, Reiner agreed to the deal with a big smile and handshakes all around. ScratchWorks’ Season 4 was off to a roaring start.
Andes Wealth Technologies
Up next was MIT graduate, CFA and veteran technologist Helen Yang with her award-winning technology platform, Andes Wealth Technologies. Andes is an integrated client onboarding and communications platform designed to help advisors deliver differentiated and personalized services at scale, incorporating behavioral finance to help advisors better manage client relationships.
Yang’s opening offer was a very rich one of $1.8 million for 6% of the company, creating a valuation of $30 million. While both Bicknell and Nathanson are big believers in behavioral finance and noted the need for better tools for advisors to work with clients, they pushed back against this high valuation.