Wealthtech funding hits record $3.7 billion in 2020

Wealthtech funding hits record $3.7 billion in 2020
Investments in wealthtech are expected to increase this year as millennial-friendly brokerages acquire large customer bases and expand product offerings. Industry trends including increased interest in sustainable investing and API integrations will serve as a catalyst for wealthtech funding through 2021.
JAN 20, 2021

Funding in wealthtech hit new highs last year undaunted by the economic turmoil and the major market volatility caused by COVID-19. Instead, global lockdowns led to increased trading volume and tech adoption that ultimately fueled fintech investments to record-setting heights. 

Last year, wealthtech funding set a new annual record of $3.7 billion across 157 deals through November, according to a CB Insights report. The increase is a more than 50% spike from the $2.4 billion wealthtech companies had raised during all of 2019.

“During the pandemic, trading volume increased amid market volatility sparking a need for wealthtech solutions to become more seamless, digitally-savvy, and attractive for institutions, retail investors, and the new generation of young investors,” CB Insight’s Intelligence Analyst Anisha Kothapa said. “We expect to see similar M&A activity or partnerships between incumbents and startups this year.” 

Industry trends including increased interest in sustainable investing and API integrations will serve as a catalyst for wealthtech funding through 2021, Kothapa said. 

Mega-round funding — rounds more than $100 million — is expected to continue in 2021 as millennial-friendly brokerages like Robinhood acquire large customer bases and expand their product offerings to become full-fledged financial services firms, according to Kothapa. 

The online trading platform has gained momentum with consumers as the fall out of the pandemic has spurred more young investors to flock to the mobile investing app, likely helping the startup to raise large funding rounds, according to the report. 

The uptick in funding last year was largely due to six mega-rounds that took place during the second and third quarters of 2020, which collectively accounted for $1.7 billion — or 46% — of wealthtech funding, according to the report. 

These mega-rounds were led by free trading platform Robinhood, which raised $1.26 billion across four rounds in 2020; Trumid, an electronic bond trading platform that raised $200 million in a Series E round in July; and Aspiration, an impact-driven online financial services firm that raised $135 million in a Series C round in May. 

During the first quarter of 2020, only one mega-round occurred when alternative asset investment platform iCapital Network raised $146 million. 

Robinhood, for one, has already made it clear that its latest cash influx signals a long-term opportunity for the company to evolve into a full-service financial institution for its millennial and Gen-Z clientele. 

Latest News

Advisor moves: Atlas tops $1B as Wells Fargo, UBS add bank veterans
Advisor moves: Atlas tops $1B as Wells Fargo, UBS add bank veterans

Wells Fargo adds two bank-channel recruits, UBS lands a JPMorgan Chase veteran, and a multi-family office lifts Atlas past $1B

Advisor mom’s son used her password to log into clients’ accounts, sell deal with conflicts, according to Washington state
Advisor mom’s son used her password to log into clients’ accounts, sell deal with conflicts, according to Washington state

“The state comes down on you in years when you make 40% returns for clients,” said Bill Swayne, the advisor and son of Candace Swayne.

Osaic in talks with Anthropic as AI reshapes advisor workforce
Osaic in talks with Anthropic as AI reshapes advisor workforce

The Independent broker-dealer giant has had “active conversations” with the Claude maker, which is days away from its expected IPO

The retirement milestone advisors aren't tracking
The retirement milestone advisors aren't tracking

For Gen X clients entering life after work, answering the financial question isn't enough to solve the entire retirement equation.

Wealthtech firms target stock pay, pensions and heirs for advisors
Wealthtech firms target stock pay, pensions and heirs for advisors

Tools from Grantd, Income Lab and Healthspan Wealth aim to keep RIAs involved in clients’ biggest money decisions

SPONSORED Best Practices for Engaging Women Around Alternatives

Growing wealth, evolving priorities, and untapped opportunities are reshaping how women approach long-term investing.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.