Buying Options: Wealth Tech Exit Activity In One Timeline

Wealth tech startups are disrupting personal wealth management and institutional trading, with companies in the space seeing a record 74 deals in 2016. These fintech companies offer an alternative to traditional wealth management firms by offering technology-enabled tools that are advancing the investment and wealth management profession.

To see how M&A and IPO activity has trended in the space, we used CB Insights data to create a timeline showcasing wealth tech first exits between 01/01/12-03/31/17.

Exits trends

Though a relatively nascent subindustry, there have been 29 wealth tech exits since 2012, including 28 mergers and acquisitions (M&A) and 1 IPO. Exit activity surged in 2015, with a record of 11 exits, all of which were from M&A. 2016 lagged 2015 with 8 exits, all of which were also M&As.

2017 is off to a strong start with 3 exits as of Q1’17. This is more than 2012 and 2013 which only saw 2 exits each, and is tied with 2014’s total number of exits. 

Key takeaways:

• One of the earliest exits in the wealth tech space was a merger between Zecco and TradeKing in Q2’12. Zecco, one of the earliest digital brokerages, launched a commission-free trading platform that predates Robinhood. However due to low customer adoption of mobile in the early 2000s, the company struggled to bring in revenue with a commission-free cost structure. Zecco merged with TradeKing, a competing digital brokerage firm, and implemented a flat trading fee.
• TradeKing went on to acquire GAIN Capital Securities in Q2’13, TraderOS in Q1’15, and MB Trading in Q3’15. TradeKing was acquired in Q2’16 by Ally Financial at a $275M valuation.
• Yodlee, a cloud-based data analytics software for wealth managers and investors, is the only wealth tech IPO since 2012. It is also the most well-funded wealth tech company pre-exit. Yodlee raised $142.4M from investors that included Accel Partners, Bank of America, Citigroup, Envestnet, J.P. Morgan Chase & Co., Merrill Lynch, Sequoia Capital, and others. Not pictured, Yodlee was acquired by Envestnet in Q3’15.
• Envestnet, a publically traded wealth management software provider, has been one of the most active acquirers in wealth tech, tying TradeKing with 3 acquisitions. The firm has quietly deployed approximately $800M to make strategic acquisitions of wealth tech companies to help banks combat disruption of fintech startups. This includes Upside, Finance Logix, Wheelhouse Analytics, and Yodlee.

• Banks and financial services providers have also made strategic acquisitions of wealth tech startups to expand their services. This includes Northwestern Mutual’s acquisition of financial planning software LearnVest in Q1’15, as well as BlackRock’s acquisition of robo-advisory firm FutureAdvisor and Fidelity’s acquisition of wealth management software provider eMoney Advisor.
• Closing out Q1’17, the latest exit was Trumid‘s acquisition of Electronifie. Both platforms provide an electronic bond buying intermediary that creates transparency and increases liquidity in the bond market.

Want more data about fintech startups? Log in to CB Insights or sign up for free below.