By Daniel Lanyon on Tuesday 9 November 2021
The Frankfurt-based company will use the new cash to build out its index infrastructure technology.
Bita, a Frankfurt-based index technology platform, has raised a €6m Series A funding round from ETFS Capital.
The long term move to passive investing via exchange traded funds (ETFs) has been an important story in the digital wealth space, powering much of the underlying assets distributed via direct to consumer fintechs.
Digital wealth managers such as Nutmeg and Scalabale Capital and neo brokers like Bitpanda and Freetrade, as well those offering digital pensions such as PensionBee, have tended to provide exposure via ETFs or ready-made portfolios from the likes of BlackRock and Legal & General.
Speaking to AltFi, Victor Hugo Gomez (pictured), CEO and co-founder of Bita, says a new era of direct indexing - where portfolios are constructed by dis-intermediating the traditional providers - as well granular customisation of indexes is quickly becoming a new area for clients.
The transition from active to passive investing has been a windfall for index providers, he says. But there is also a new move to a much greater era of customisation in portfolios that could lower fees and improve consumer choice.
“In the past ten years, they [customers] have wanted more in terms of having ESG incorporated into portfolios or certain types of factors. All those large index providers have set up an infrastructure that works extremely well for delivering general solutions but it tends to be slower and less flexible when it comes to delivering custom solutions.”
He believes more and more funds will flow to indexes - mostly from active mutual funds - but that there is a huge need for making customisation simpler and faster. Large index providers are mostly set on providing the next big index theme whereas Bita is “obsessing” more on direct indexing and other new paradigms of customisation.
“At Bita, we have set ourselves the ambitious mission of providing the “rails and roads” where investment customisation will run. From indexing platforms and solutions, to portfolio customization APIs, our infrastructure will enable us, as well as our clients, to build innovative products which are better suited to the opportunities and challenges ahead,” he said.
Martyn James, Managing Director, ETFS Capital said: “We are constantly asked about who can challenge the big index providers’ dominance. Our investment shows that we believe it is BITA, with their tech-first approach.”
“Index expertise alone is not enough. What is needed for ‘scaled disruption’ is the provision of a comprehensive indexing technology solution, which has not been available to date.”
The new cash will allow Bita to accelerate its technology rollout, add new functionalities to its all-in-one indexing platform and expand its business activity further across Europe and North America.