When many people hear “wealth management,” they think of elite advisors meeting old money clients at the country club, or decades-old firms with big names such as Fidelity or Schwab. But in the years ahead, one Silicon Valley startup is aiming to shake up that establishment — and just has raised a nice chunk of new funding to help.
Personal Capital, the online-oriented personal wealth management platform company, has taken on $25 million in a new round of funding led by Crosslink Capital with the participation of asset management giant BlackRock and previous investors Institutional Venture Partners (IVP) and Venrock. The round, which serves as Personal Capital’s Series C, brings the total amount invested in the nearly four year old company to $52.3 million.
In an interview this week, Personal Capital’s CEO Bill Harris, whose history in the financial software space includes time as CEO of both Intuit and PayPal, said that the funding comes after some solid growth on both sides of Personal Capital’s business. The online side, which provides free asset management tools through the web, currently has more than 200,000 users with in excess of $20 billion assets being tracked on the platform. The financial advisory services side, which charge a commission and are provided on the phone or via email through Personal Capital’s team of full-time advisors, currently reaches more than 700 clients with nearly $200 million being managed.
Those numbers are encouraging for an upstart player in a space like wealth management. But Harris says he sees the opportunity in front of Personal Capital as much, much bigger. He said:
“This is the largest market I’ve ever encountered. Individually managed investable assets is a $32 trillion dollar market in the United States… that’s twice the GDP of the entire country. And nobody is dominating it. Even the biggest guys in the space — Fidelity, Schwab — they all have low single digit shares of the market.
What we’re building, consumer technology with customer-centric and holistic advice, I think this represents where the industry will go over next 10 to 15 years.”
In that same vein, when asked about whether Personal Capital has courted M&A offers along the way from bigger tech or finance firms, Harris says he’s focused on staying independent for the time being. “A lot of companies in Silicon Valley are not companies, they’re products. And once they’ve demonstrated the abilities of that product it’s time to be acquired,” he said. “I believe that the service we’re offering is broad and deep enough and the market we’re selling into is large enough that we have the opportunity to be a true company rather than just a product.”
In the near-term, the funding will also be put toward growing Personal Capital’s staff, which currently consists of some 70 full-time employees. The company is also set to open its first new satellite office outside of the San Francisco Bay Area, in Denver.
Overall, though, Harris said the plan is to stay the course. “We have built the personal advisory piece and technology piece, and proven the economics of acquiring users and converting them to clients. At this point we have a formula which is working. The most important thing for us for the next year is to rinse and repeat.”