Home Startups An investing startup that grew by $100 million in a single day just got some big name backing

An investing startup that grew by $100 million in a single day just got some big name backing

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  • Robo-adviser Wealthfront landed $75 million in a new
    fundraising round, the company announced Thursday.
  • Tiger Global Management, the New York-based investing
    firm, is leading the fundraise.
  • Wealthfront will use the cash to enhance its Path tool
    and continue to attract younger investors to its purely
    automated platform.

 

Tiger Global Management is making a big bet on a California
investing startup.

Wealthfront, a robo-adviser with more than $9 billion under its
management, announced Thursday that Tiger Global, the New York
investment firm, would lead a $75 million fundraising round. The
firm, which declined to share its valuation with Business
Insider, was founded in 2011. It counts Benchmark Capital, DAG
Ventures, and Greylock Partners among its investors.

Wealthfront plans to use the new capital to enhance its Path
platform, which allows users to view all of their financial
accounts.

“Path’s appeal to young people propelled our growth such that
people under 45 now represent 85% of our clients,” Wealthfront
cofounder Andy Rachleff said in a statement. “We believe our
success with this group is based on our unique ability to
optimize and automate our clients’ personal finances.”

Wealthfront has adamantly held on to its belief that the future
of financial advice is in automation. Unlike fellow robo-adviser
Betterment and incumbent rivals such as Charles Schwab,
Wealthfront has remained a pure robo without human advisers. The
strategy appears to be working. On Wednesday, the firm’s assets
grew by $100 million, a spokesperson told Business Insider. That
growth was fueled by both new desposits and stock market gains.

“A software only approach specifically appeals to a younger
demographic, and we have embraced that,” Rachleff told Business
Insider during a recent visit to New York.

“Whereas the rest of the industry, as Wayne Gretzky would say, is
skating to where the puck is, not where it is going to be,” he
added.

That laser focus was part of the appeal for Tiger Global.

“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 Management, in a press
release. “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.”

In just three years global millennial wealth could stand at $24
trillion, according to UBS, the Swiss money manager, up $7
trillion from 2015.

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