Betterment saw the top deal of 2016. In 2017, the top deal so far went to Raisin.

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Globally, there were 836 VC-backed fintech investments in 2016. Within fintech, we continue to see growth in investments to companies focused on technology that supports investment and wealth management. This sub-category hit a deals record of 74 financings across $657M in funding in 2016.

We define this category to include fintech companies that offer an alternative to traditional wealth management firms and technology-enabled tools that are advancing the investment and wealth management profession. This includes full-service brokerage alternatives, automated and semi-automated robo advisors, self-service investment platforms, asset class specific marketplaces, and tools for both individual investors and advisors to keep up with the changing dynamics in wealth management.

This category excludes both personal and corporate expense management and monitoring tools, tools specific to investment banks, and high-frequency trading platforms. These are areas we will be exploring in later research briefs.

Using CB insights database, we looked at funding trends to this fintech subcategory.

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Annual investment trends

2016 set a record with 74 deals to wealth tech companies across $657M. The top deal in 2016 was a $100M Series E investment to Betterment that included Menlo Ventures, Bessemer Venture Partners, Anthemis Group, Citi Ventures, and others.

Betterment is one of the largest robo-advisory firms in the market, with approximately 208,900 customers according to their latest Form ADV filed with the SEC.

Over the last 5 years investment to the space has consistently grown. The biggest annual deal increase occurred between 2012 and 2013, when deals jumped 147%. Financing also grew consistently every year between 2012-2015. Despite a slight dip between 2015 and 2016, financing last year was still stronger than 2014’s annual total.

WT Annual (12-16) V5


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Quarterly investment trends

Breaking down trends by quarter, Q2’15 saw the greatest number of deals, with 24 investments across $210M in funding. Q3’15 was a record quarter for funding with $340M invested across 16 deals.

The spike in funding in Q3’15 was due to the $144M investment to Saxo Bank by Sinar Mas Indonesia. Saxo Bank is an online brokerage firm that provides a mix of advisory and algorithmic-backed trading for personal investors and institutional clients. Saxo Bank recently announced the closure of their Cyprus office citing that they are looking to further digitize the company.

Investments and financing to the investment and wealth tech category started to gain momentum in Q2’14, with 13 deals across approximately $268M in financing. Investments remained strong until Q4’15 which saw a dip in deals and dollars. Deals recovered in 2016 and ended the year trending up in Q4’16.

2017 YTD has already seen 17 deals across $130M in funding. The top deal YTD was a $32M Series C to Raisin, an investment marketplace for deposit products, that included participation from Thrive Capital, Index Ventures, and Ribbit Capital.

WT Quarterly V4

 

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