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Street appeal: Motif Investing attracts the interest of Goldman Sachs

Investment bank makes an undisclosed investment in the Silicon Valley startup and online broker

Apr 12, 2013 @ 12:35 pm

By Davis Janowski

Motif Investing has raised an additional $25 million in Series C financing from a number of investors, including, for the first time, Goldman Sachs & Co.

Goldman's undisclosed investment in the firm joined existing investors including Foundation Capital, Ignition Partners and Norwest Venture Partners.

Darren Cohen, a managing director of principal strategic investments at Goldman, is joining Motif's board as an observer. Goldman Sachs spokesman Michael DuVally confirmed Mr. Cohen's role but declined to disclose the amount of its investment.

In an interview Thursday, Motif chief executive Hardeep Walia explained that the Goldman investment represented a strategic deal for the investment bank.

“It is the biggest deal for us though; these are the smartest guys on Wall Street and it is a way for us to get access to some very smart people,” he said.

I have written about Motif a number of times but for those who need a reminder or have not heard of it, Motif Investing is an online broker (and registered broker-dealer with Finra) that provides a platform for users to invest in theme-based portfolios of stocks, bonds and ETFs called motifs. The firm also creates portfolios.

Those motifs, many created by the firm itself originally, range in their focus on everything from tablet computing to mobile technology, to healthy foods and even global inflation. Standard pricing is $9.95 per motif and $4.95 per individual stock transaction.

In February Motif added the new feature that allows individuals, including registered investment advisers to build their own motifs from scratch.

During my various conversations with Mr. Walia, I have tried sometimes to lump Motif in with direct channel players including Wealthfront and Personal Capital.

“Think of those other guys as Adviser 2.0, what we are doing is quite the opposite. We are partnering with the existing adviser channel,” he said.

“Think of us as ETF 2.0,” Mr. Walia said, adding that many of the features the company is working on are a result of polling advisers that have signed up for the platform.

“We have some strong relationships with advisers and we see advisers as having a very strong role, we want to help them run their businesses,” he explained.

Later this year, Motif will roll out features that allow motif creators both to market their own motifs and receive compensation on them through a royalty program.

Board members include former Securities and Exchange Commission Chairman Arthur Levitt and former Wall Street executive Sallie Krawcheck.

“We are thrilled Goldman Sachs has decided to invest in our vision of bringing low-cost, transparent, theme-based investing to a broader audience,” wrote Mr. Walia in a prepared statement issued today.

“We are pleased to be an investor in Motif, a company that has taken an innovative approach to traditional investing,” added Goldman's Mr. Cohen in the statement.

For more information, visit Motif Investing online.

Related stories:

Motif provides investors with investment themes, advisers should take note too

[Motif Investing Update, second half of column]; Schwab plans product review site for advisers


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