Bitcoins may be getting a lot of buzz, but the market for products that deal with old fashioned dollars and cents is apparently still strong.
To wit: Motif Investing, the Silicon Valley startup headed up by Microsoft alum Hardeep Walia that lets people invest their money in themed groups of stocks called “motifs”, has raised $25 million in a new round of funding led by Goldman Sachs.
This counts as a Series C round for Motif, bringing the total amount of money invested in the company to $51 million since it was founded in mid-2010. All of Motif’s previous investors, including Ignition Partners, Norwest Venture Partners and Foundation Capital, also pitched into this new round. As part of the investment Darren Cohen, Goldman’s managing director of principal strategic investments, is joining Motif’s board as an observer.
In an interview this week, Walia told me that Motif’s growth has been strong since it officially launched its platform to the public last summer. To date more than 7500 “motifs” have been created, which are investment indexes that let people invest in genres such as “Biotech Breakthrough” or “Housing Recovery” as opposed to buying individual stocks or putting complete trust in a mutual fund or ETF.
Motif, which Walia bills as a “Facebook meets eTrade meets Mint.com,” does not collect management fees, which is another thing that sets it apart from traditional money management vehicles. It makes money by charging a flat $9.95 fee to make a motif (which can include up to 30 stocks) and in several other ways, such as collecting margins on investments and selling value-added services and products. In the months since launch, the platform has attracted a diverse user base ranging from “ultra high-net-worth individuals” who primarily appreciate that Motif does not charge management fees, to “newbie investors” who appreciate the site’s natural language approach, Walia says.
With the fresh Series C funds, Walia says that Motif will work on further developing its product for financial advisors, which will let professional consultants use Motif’s investment platform with their own clients. There are other new products in the works, as well, he says. Motif’s own staff, meanwhile, has grown to 40 full-time employees, and the funding will also be used to continue to add talent (with a special focus, not surprisingly, on engineering.)
When asked about strategic options — after all, Goldman Sachs doesn’t exactly invest in companies without an eye on getting a return — Walia said that he’s focused on building Motif as “a company that lasts and is independent, so that we can continue to disrupt this space.”
That said, Walia, whose resume includes time on the M&A team at Microsoft, did acknowledge that Motif could make sense as an acquisition target, especially for established entities that deal in ETFs, stock brokering, and financial services. “A lot of people have found what we do quite fascinating… we are very attractive to certain players.” For now, though, Motif certainly has the vision — and funding — necessary to continue to grow as a standalone entity, and it should continue to be one to watch at the intersection of finance and technology.