Alternativ raises $10 million as digitally native RIAs pick up steam

Digitally native wealth management firms continue to be an attractive destination for venture capital investments.

Alternativ, a San Francisco-based technology company, secured a $10 million financing round to launch what it calls a “wealth management operating system.” The company also owns Alternativ Wealth, a registered investment advisor that manages $430 million, according to its most recently filed form ADV (the company says its actual AUM is closer to $565 million).

The funding will be used to continue developing Alternativ’s technology and to grow the RIA through acquisitions, said Christian Haigh, CEO of Alternativ. The company declined to disclose the source of its funding.

Haigh is also co-founder and general partner of Legalist, a private fund sponsor with roughly $1 billion in assets under management. From working with wealth management firms, he learned the pain points financial advisors encounter in trying to add alternative investments into client portfolios.

After setting out to build a system to help advisors access alternative investments, Haigh realized that same problems — a lack of digital integration and too much paperwork — apply to most of advisors’ workflows.

“There are hundreds of different technologies, none of which talk to each other,” Haigh said. “We are building that operating system, that advisor HQ, where they can log in and use a sole technology to run their business, integrated with all the other vendors that you work with on a day-to-day basis.”

Alternativ's technology includes digital account opening across Schwab Advisor Services, Fidelity Institutional, Folio Investing and other smaller custodians that focus on alternatives. The goal is to offer an account opening experience as seamless as those deployed by robo-advisors like Betterment and Wealthfront, Haigh said.

“There’s no reason it shouldn’t be that simple for traditional advisory firms,” he said.  

The company has a focus on providing access to alternative investments and the technology alts, alongside more traditional asset classes in client proposals. Alternativ also provides digital subscription documents required for alternatives, and has integrations with CRMs and portfolio management tools.

In 2022, Alternativ acquired Atomi Financial Group, a $50 million RIA that has since been rebranded to Alternativ Wealth. "The firm has grown by using the technology to entice advisors to join, and the company is looking to further expand through acquisitions," Haigh said.

“We are building an advisory firm around our technology,” he said. “We are the first users of our products … we think that the hybrid of building out technology while also running an advisory firm gives us a unique outlook.”

This approach is increasingly popular among a new generation of RIAs. As opposed to fully automated robo-advisors, digital hybrids that combine human advisors with automated investment management, or new RIAs launching with technology available on the market, these firms are building custom technology first and using it to power their wealth management firm.

And the approach is attractive to outside investors. For example, Farther has raised a total of $22 million after closing a $15 million Series A round in August. Savvy, another digitally native RIA, closed an $11 million round in November to bring its total funding to $18 million.

The approach also appears to be successful at recruiting advisors. Farther launched in 2020 with just one advisor; today it has 40 advisors managing $675 million in assets. Savvy launched in August 2021 and in April reported six advisors, $120 million in assets, with more in the process of transition.  

Haigh launched the company with Gabe Krambs, co-founder of legal technology company CS Disco, and Alex Farman-Farmaian, an early employee of Carta, a fintech company focused on helping companies offer employee equity. Haigh is confident that Alternativ’s unique combination of expertise in alternative investments, wealth management and technology will create a differentiated firm on the market.

“I see two kinds of [advisory] firms typically in the market: [those] built by advisors who don’t really understand the tech universe, and businesses built by Silicon Valley-types who come into wealth, this massive market, to disrupt it,” Haigh said. “We’ve been very thoughtful about making sure our team is made up of both types.”