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; fundraising <a href=&quot;http://www.investmentnews.com/article/20140415/FREE/140419943&quot;>touches off a Twitter firestorm.</a>
JUN 20, 2014
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.

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