- Betterment, the largest independent roboadviser with $11 billion under management, provides algorithm-based online and mobile financial advice.
- It raised $70 million in a funding round in July led by Swedish investor Kinnevik, giving it an $800 million valuation.
- According to a list of investment opportunities from EquityZen, a platform for pre-IPO shares, shares are now being offered at an implied valuation of over $1 billion.
Betterment, a roboadviser with $11 billion under management, is considered a unicorn in the private markets.
Preferred shares of Betterment are being offered at a price of $11 on EquityZen, an online marketsite for shares of private companies, according to a list of investment opportunities seen by Business Insider. That gives Betterment an implied valuation of over $1 billion.
While private companies like Betterment do not actively trade on a stock exchange they can sometimes trade in private markets on sites like EquityZen. It’s not clear how many shares are up for sale, or where they have traded in the past. Nor is it clear who the sellers and potential buyers of those shares are, or whether any shares have or will change hands. Still, the shares being offered imply a unicorn valuation for Betterment.
EquityZen declined to comment on the price, saying any active deals it “may or may not be working on” are restricted by a non-disclosure agreement. Betterment declined to comment.
EquityZen, a four-year-old New York-based company, provides a platform on which private company investors can sell their shares to accredited investors. It serves 20,000 investors and has secured $6.5 million in funding. It is among the many platforms that have sprouted amid the dry initial public offering market.
Betterment landed an $800 million valuation in July after a $70 million funding round led by Kinnevik, a Swedish investment company. Other investors in this round included Menlo Ventures, a California-based venture capital firm, and Francisco Partners, a California-based private equity firm.
Betterment has shifted its strategy to capture clients from much larger money managers, including Charles Schwab and Morgan Stanley, who skew older and wealthier. Such clients show a strong desire for human help to better understand more complex financial needs.
Responding to those preferences, Betterment has adopted a hybrid model of financial advice incorporating both human and automated advice into its offerings. It rolled out two new plans in February that provide users access to a small team of human advisers. In July, the company consolidated those offerings into one plan with unlimited face-to-face human advice and the ability to text advisers through Betterment’s mobile app.
“Our business has changed a lot, in one sense,” Stein said in a recent interview with Business Insider. “But in another sense, we are doing the same thing we have always been doing — that is, thinking about the customer and what the customer wants, and then building financial services in a way that actually responds to customer demands, which I think is not the way the old guard has done things.”
Betterment’s growth has been impressive, with Stein telling Business Insider it was taking in $12 million a day. Still, it still faces steep competition. The wealth-management space has caught on that roboadvisers are hot, and many big firms have rolled out their own robo offerings. Charles Schwab and Vanguard are two such giants with trillions of dollars in assets under management who both have their own robos. JPMorgan, the financial services giant, is working on its own roboadviser.
BI Intelligence forecasts that roboadvisers will manage around $1 trillion by 2020, and around $4.6 trillion by 2022.