Participated · Equity · Oct 2014

Wealthfront is a robo-adviser offering low-cost automated investing services to retail customers. The company charges a 0.25% management fee and, per reporting cited in the article, manages roughly $25 billion in assets under management (AUM). At that fee level, the article estimates Wealthfront’s annual revenue to be about $62.5 million. UBS and Wealthfront called off a planned $1.4 billion sale, but UBS instead invested $69.7 million in the company at a $1.4 billion valuation. Wealthfront says the financing recapitalizes the business and that it will be cash-flow positive and EBITDA profitable in the next few months. The company is exploring partnership opportunities with UBS while remaining independent. Wealthfront is a software-based financial services company that delivers automated financial planning and investment management through its Path service and PassivePlus® strategies. The company consolidates clients' financial accounts into a single view to form the foundation for client interaction. Anyone with $500 can open a Wealthfront investment account. Wealthfront launched in December 2011 and was founded by Andy Rachleff and Dan Carroll. The firm has expanded into financial planning services (2017) and introduced its first banking service, the Portfolio Line of Credit. It currently manages more than $9 billion. Wealthfront provides an automated service to manage clients' long-term investments with tax-efficient, low-cost portfolios and features such as daily tax-loss harvesting, the Wealthfront 500, single-stock diversification and Wealthfront for the Workplace. Launched in December 2011 and led by CEO Adam Nash, the company intends to use the new funds to continue building out its service. The platform manages over $1.5 billion in assets under management. Pricing is free for accounts under $10,000 and 0.25% on assets above $10,000. The company has raised over $129 million to date. The business is based in Palo Alto, California. Wealthfront offers automated investment and financial-planning services with features such as tax-loss harvesting, a $5,000 minimum account (free under $10,000), and tailored content on mobile. The service is positioned to undercut traditional advisory models on fees and automation. The company reports $800 million in assets under management and rapid growth (over 450% year-over-year at one point, adding $250M in a single quarter). Clients span ages 19–93, with more than 55% under 35; average client balances are $80,000–$100,000 and account sizes range from $5,000 to over $10 million. The user base is tech-heavy (largest representation from Google, Facebook, LinkedIn, Microsoft, Twitter, Palantir, VMware, Apple, Intuit and Cisco) but also includes professionals across other fields. Wealthfront is lean (about 35 employees) and plans to hire engineering and design talent while further personalizing its mobile product and acquiring new users. Wealthfront is an automated investment service that builds diversified portfolios primarily from ETFs across U.S., foreign and emerging-market stocks, bonds, real estate and natural resources. The product charges a low annual fee of 0.25 percent and offers automated tax-loss harvesting for accounts worth at least $100,000. The company reports rapid user growth (about 20% month-over-month) with roughly a quarter of users adding money in a given month and about a third of new users coming via a referral/rewards program (referrers get $5,000 managed free, referees $10,000 managed free). Wealthfront has made product changes such as adding a broader range of bonds and retirement accounts, which the company says should boost returns by roughly 0.5% per year. Founder Andy Rachleff leads the company and Chief Investment Officer Burt Markiel oversees investment strategy; Adam Nash was hired to focus on growth. The service has delivered positive user returns in early use cases cited in the article, and the company plans to use new funding to improve the core product and accelerate growth.