Robo-advisors funding declined 50% in Q3

By David Tuckwell on Monday 23 October 2017

Savings and Investment

Venture capitalists lost interest in backing robo-advisors in Q3

Venture capital funding for robo-advisors fell in the quarter ending September, a new survey found.  

Venture capital funding for fintech dropped more than 25 percent across the globe in the third quarter of 2017 but robo-advice was particularly hard hit.

Robo-advisors globally received $272m in funding, down from the $531m they received in the second quarter, a new survey from CB Insights has found.

“Deals and funding to VC-backed wealth tech companies dipped in Q3’17,” the report said.

“Funding dropped 49 percent after a spike in Q2’17. The top investment in Q3’17 was $70m Series E to robo-advisor Betterment, which valued the company at $800m.”

New York-based Betterment, the world’s largest robo-advisor by assets under management, received the most funding of any robo-advisor, taking in $70m in a series E led by Swedish investment firm Kinnevik.

The funding coincides with Betterment’s shift away from a pure digital offering to a “hybrid” model – where investors can receive advice from both flesh and blood humans and robots.

Some drop off in funding was perhaps inevitable, the report said, given that the second quarter set new records for VC funding.

Fintech unicorns continue to grow and multiply, with fintech unicorns now collectively valued at $75bn around the world.

However, there was not a single robo-advisor among the unicorns, with the biggest robo-advisor by market capitalisation – again, Betterment – coming in at a $800m valuation.

This article first appeared on www.roboadvicenews.com

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