Online rivals Betterment, LearnVest rake in $60 million of venture funding

Betterment's Series C round brings in $32 million; LearnVest closes on $28 million

Apr 15, 2014 @ 11:56 am

By Joyce Hanson

Online advisory firms, Betterment, Learnvest, financial planning, venture capital
+ Zoom

Betterment and LearnVest on Tuesday both announced new rounds of funding that makes the two online advisory firms richer by a combined $60 million.

Betterment closed on a $32 million round of Series C funding from new investors Northwestern Mutual Capital, Globespan Capital Partners and Citigroup Inc.'s Citi Ventures corporate venture capital unit. Also participating are previous investors Bessemer Venture Partners, Menlo Ventures and Anthemis Group.

More: Twitter debates erupt over online advisers.

LearnVest pulled in $28 million of new funding led by Northwestern Mutual Capital. Other participants were previous LearnVest investors Accel Partners and American Express Ventures.

The capital raising news touched off a firestorm on Twitter as industry experts and pundits debated the impact of the fresh capital on these up-and-coming companies.

Officials for Northwestern Mutual Capital could not be reached for comment.

“Betterment has developed a platform that customizes investment portfolios based on an individual's risk profile and financial goals using smart algorithms,” said Arvind Purushotham, managing director at Citi Ventures. “At Citi Ventures, we're constantly looking for opportunities to invest in and partner with companies that enhance the customer experience, and Betterment is a great example of such a company.”

Other startups that Citi Ventures has funded include data analysis firm Ayasdi Inc., security intelligence firm Click Security and global trading platform InvestLab.

“Robo-advisers” such as Betterment and LearnVest have been identified in the last few years as a potential threat to human advisers. These online advice platforms offer scalable technology that reduces the cost of advice and provides financial planning services to investors who don't want to pay the higher fees charged by traditional advisory firms.

Launched in 2010, Betterment now counts approximately 30,000 customers and $500 million in assets under management. The firm offers tech-enabled services including asset allocation, tax optimization and portfolio re-balancing. The Series C funding will go toward improving and expanding the tools offered on Betterment's platform.

LearnVest was launched in 2009 as an online financial-planning guide for women, but it has since expanded to serve men and women, and offers advisory services. It operates as a fee-based subscription service, and does not manage assets.

LearnVest's venture-capital funding now totals about $72 million. Betterment has received $45 million in venture funding.

Earlier this month, online financial advisory firm Wealthfront Inc. announced it had raised a $35 million third round of financing led by Index Ventures and Ribbit Capital.

This story has been updated with details on Wealthfront's latest fundraising.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Pershing's Dolly: 3 challenges facing advisers ahead

What are the biggest challenges facing financial advisers today? Pershing Lisa Dolly explains some of the hurdles, and how great advisers are overcoming them.

Video Spotlight

Will It Last As Long As Your Clients Do?

Sponsored by Prudential

Video Spotlight

The Catalyst

Sponsored by Pershing

Latest news & opinion

Labor's Alexander Acosta and SEC's Jay Clayton tell lawmakers they will work together on fiduciary rule

In separate appearances before Senate panels, the regulators stressed the cooperation that Republican legislators and opponents of the DOL fiduciary rule are demanding.

Brian Block denies cooking the books at Schorsch REIT

Former CFO claims everything he did was 'appropriate' and 'correct.'

Interns will take on several roles at advisory firms this summer

College students are helping with client prep, firm visioning and long-term projects, among other duties.

10 funds with largest 3-year outflows

Even well-managed funds that have beaten the S&P 500’s 10.1% average annual gain have watched investors flee.

Wirehouse training programs are back

At one time, major brokerage houses ran large, expensive training programs for thousands of young brokers, and now it looks as if they are about to return to that model.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print