Mobile apps push wealthtech funding to record highs

Mobile apps push wealthtech funding to record highs
The first quarter alone in 2021 netted $6 billion in new wealthtech funding, which accounted for 41% of the total investments raised last year, according to the most recent data from CB Insights.
JAN 25, 2022

The wealthtech sector is booming, with record levels of global funding pouring into wealth management technology firms last year — much of it going to new retail investing apps.

The $14.6 billion in investments in 2021 was almost triple the amount of funding during the prior year; it was spread out over 486 deals, a total that jumped 46% from just 332 deals inked in 2020.

The first quarter alone netted $6 billion in new wealthtech funding, which accounted for 41% of the total funding raised last year, according to CB Insights senior analyst Elif Yayla.

Robinhood Markets Inc. alone raised a total of $3.4 billion ahead of its IPO in the first quarter of the year, she added. Other apps, such as Public Holdings Inc., Webull Financial and Stash Financial Inc. also raised some of the largest rounds of the year.

“Retail investing apps drove a significant portion of funding in 2021,” Yayla said. “[They] played a big role in the year-over-year funding jump.”

According to research from Deloitte, 6 million people downloaded trading apps in January 2021 alone, and they represent new investors who are younger and more tech-savvy than previous generations. Overall, hours spent on finance apps were up 90% year over year in 2021, while downloads of online apps jumped 20%, according to a report by Bloomberg last year. 

But the activity slowed toward year-end. Wealthtech deals actually dropped 16% in the fourth quarter from a record of 132 deals in the previous quarter, and funding dipped from a record high of $5.8 billion in the first quarter of last year.

Because of the early funding rounds, the U.S. received more dollars than all of the other countries combined, according to the CB Insights research.

The boom is also due in large part to demographics, said Grant Easterbrook, a consultant and co-founder of the retirement fintech Dream Forward, which was acquired in 2020.

“Demographic trends are driving changes in consumer wealth management,” he said. “The industry has traditionally relied on a network of in-person financial advisers giving advice and distributing products. But those advisers are rapidly aging.”

Easterbrook cited data from Cerulli Associates that estimated more than 111,500 advisors, representing more than one-third of the entire workforce, will retire over the next decade.

“The need to transition to serving more tech-savvy Gen X and millennials creates demographic pressure to adopt wealthtech,” he said. “Advisers will simply have to use technology to be more efficient.”

The biggest round of the fourth quarter went to Aspiration Partners, a personal finance company based in Marina del Rey, California, that offers a host of banking and investment products with a focus on sustainability and curbing climate change. The private equity funding topped $315 million, according to the research. 

TradingView Inc., a charting platform and social network for traders and investors, raked in $298 million in a Series C round. And Masterworks, an alternative investment app that offers opportunities to invest in fine art, also ranked in the top ten with $110 million. 

Latest News

Bridgewater's flagship hedge fund surges amid volatile markets
Bridgewater's flagship hedge fund surges amid volatile markets

The firm's flagship fund, which invests in stocks, bonds, currencies, and commodities, saw accelerated gains as some peers lost ground.

ICI floats '40 Act revamp to support middle-class wealth creation
ICI floats '40 Act revamp to support middle-class wealth creation

Policy proposal offers recommendations on dual-share class funds, semi-transparent ETFs, and expanded flexibility for closed-end funds to include private market assets.

Trump-induced turbulence tests 60-40 strategy's limits
Trump-induced turbulence tests 60-40 strategy's limits

With bonds failing to provide a safety net for steeply falling stock prices, many investors are letting go of their "set it and forget it" approach.

More workers dipped into their retirement savings last year, Vanguard finds
More workers dipped into their retirement savings last year, Vanguard finds

Sneak peek into annual defined contribution plan report shows average participant balances reached an all-time high amid rising equity markets.

Decades-old will leaves fate of late actor Gene Hackman's $80M fortune uncertain
Decades-old will leaves fate of late actor Gene Hackman's $80M fortune uncertain

The iconic actor's death alongside his wife, Betsy Arakawa, leaves pressing questions about what happens next to his assets.

SPONSORED Beyond the all-in-one: Why specialization is key in wealth tech

In an industry of broad solutions, firms like intelliflo prove 'you just need tools that play well together'

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies