Wealthfront Lands $75M In New Funding To Build Out Its Product Suite
Source: Business Insider, Maria Terekhova
Photo: Wealthfront
Wealthfront, one of the biggest US digital wealth managers, has raised $75 million in fresh funding from new investor Tiger Global Management, and existing backers including heavyweights Benchmark Capital, Index Ventures, and Ribbit Capital. Wealthfront did not disclose its new valuation, but was previously valued at $700 million in 2014, says Bloomberg.
The funding will go towards expanding the company’s range of offerings as it intensifies its focus on investment management and banking services, said Wealthfront CEO Andy Rachleff.
Wealthfront has amassed success by going after small sums across a large customer base. While many non-incumbent digital wealth managers in the US have pivoted to a white-label or B2B model to accumulate assets under management (AUM) in larger chunks, Wealthfront has instead chosen to stick to a B2C model and go after the mass market — specifically, after millennials. By rolling out products tailored to this demographic’s needs — including a line of credit and a college savings tool, while keeping prices low by fully automating all its services, Wealthfront has successfully cornered young users and accumulated an impressive AUM of over $9.5 billion, compared to Betterment’s $10 billion.
It now seems that the standalone digital wealth manager market in the US is down to a two-horse race. Wealthfront and Betterment now both have significant AUMs, and have raised large sums from big backers, putting them comfortably ahead of smaller startups in the space: The third-biggest US player, Personal Capital, has an AUM of $6 billion. As such, the battle for AUM supremacy between the two scale-ups is now likely to intensify even further. Given how well Wealthfront’s business model seems to have served it so far, and its latest pledge to expand “even more aggressively” into other financial services lines, we can expect to see multiple announcements of new services from the company over the coming year as it flexes its muscles.