Despite scoring a big capital raise, there’s a long way to go before profitability.
Investment management firm Netwealth posted a £3.1m loss in 2017, according to filings at Companies House. Having gone live in May 2016, the firm’s online investment management service was only active for 10 months of the financial year, generating £35,998 in revenue.
Media reports estimate Netwealth’s assets under management (AUM) to be around £6.8m, on an average fee structure of 50bps. Charlotte Ransom, CEO of Netwealth, has said the firm would need another £1.8bn to make Netwealth’s cash flow positive, suggesting this won’t happen for another five or six years.
The accounts reveal that staff costs and advertising were the biggest expenditures, sitting at £1.3m and £870,000 respectively.
Netwealth’s total funds raised stands at £16.79m, after it scored a large capital raise of £10.02m in September last year.
Speaking to CityWire, a spokesperson for Netwealth said: “The exponential growth rates of these types of businesses mean that basing any form of financial year-end AUM estimate on averages and linear growth assumptions is likely to be considerably off the mark.
“Netwealth’s original and new backers put up new capital last year on the basis of the growth and trajectory so far, as well as the broader business model.”
This article first appeared on Digital Wealth News.