FutureAdvisor, which operates an online-based financial advisory services, announced it has raised $15.5 million Series B round that was led by Canvas Venture Fund. Existing investors, including Sequoia Capital, also participated in the round. As part of the funding, Rebecca Lynn, managing director of Canvas, has joined the board. FutureAdvisor, formerly known as Xulu, has now raised $21.5 in total financing, following a $5 million Series A round in 2012 and a $1 million seed round it closed after graduating from Y Combinator.
DIGITAL INVESTMENT MANAGER FUTUREADVISOR RAISES $15.5 MILLION TO SERVE THE 99%
Funds go to new hires, product, as small investors flock to online retirement savings service
San Francisco — FutureAdvisor, the fastest-growing digital investment manager, has raised $15.5 million in a Series B round led by Canvas Venture Fund with participation from existing investors including Sequoia Capital, as U.S. retail investors increasingly opt for automated financial services.
FutureAdvisor brought its digital investment management service out of beta in September with $13 million under management, and its AUM has since grown nearly 900% to over $100 million in just 9 months. FutureAdvisor manages client investments at the household level, allowing clients to roll all of their existing investments into FutureAdvisor with no tax impact, diversify their risk, and lower their tax overall exposure.
“Most Americans have never been able to access objective investment advice at any price, because traditional wealth managers had half-million-dollar minimums,” said chief executive officer Bo Lu. “Canvas’s support is going to be crucial in helping us bring these services to more small investors.”
With FutureAdvisor’s free advisory service, which tracks $11.4 billion in assets, investors receive step-by-step actionable recommendations on which assets to buy or sell in order to minimize their fund fees, optimize their taxes and diversify their risk. In its paid premium service, FutureAdvisor executes those trades on behalf of investors.
FutureAdvisor is part of a wave of financial technology startups that are transforming the way money is moved and managed, as previously exclusive services become accessible and affordable. Canvas partner Rebecca Lynn, who led FutureAdvisor’s latest fund-raising round, is already involved with other well-known financial firms disrupting the slow, hidebound investment sector.
“The banking industry is incredibly inefficient,” said Lynn, who was named one of the top female venture capitalists this year and last by Forbes Magazine. “Thanks to a new generation of startups like Lending Club and Check, the disintermediation of banks is finally in full swing. The investment advisory space is up next, and we think FutureAdvisor is leading the charge. We’ve talked to a lot of companies in this space over the years, and think FutureAdvisor has the right approach – from their technology to their team – to really nail this huge opportunity.”
The U.S. mutual fund industry had $13 trillion in assets last year, but only a tiny fraction of investors are receiving guidance on how to invest those assets.
Sixty percent of families with more than $1 million in investable assets already work with a financial adviser. Only 20 percent of mass-affluent families, who have investable assets between $100,000 and $1 million, work with an adviser. In America, there are 32 million mass-affluent families, and FutureAdvisor is one of the leading investment managers catering to that market.
FutureAdvisor was founded in 2010 by Bo Lu and Jon Xu, two former Microsoft engineers, and graduated from the startup accelerator Y Combinator. It raised a $1 million seed round, and a $5 million Series A led by Sequoia Capital in 2012.
FutureAdvisor is an award-winning registered investment advisory firm serving clients nationwide from our offices in downtown San Francisco. Our team of Chartered Financial Analysts and Math PhDs use software to actively monitor and manage our clients’ existing 401(k), IRA, and taxable accounts from a household-wide, long-term perspective. FutureAdvisor can make recommendations for your portfolio in just a few minutes. Get your free analysis at www.futureadvisor.com.
Canvas closed its inaugural fund in August 2013, and is focused exclusively on early-stage venture investments. It invests broadly in software and services, with specialties in financial services, SaaS, health IT, big data/analytics, and machine learning. Canvas portfolio companies include FutureAdvisor, HealthLoop, Totango, and an undisclosed company. Canvas is the spin-out of the IT Team from the long-established firm of Morgenthaler Ventures. The fund was formed by the general partners who led or continue to serve on the boards of Lending Club, Check, Evernote, MuleSoft, Practice Fusion, Doximity and NuoDB while at Morgenthaler Ventures. Canvas is a separate firm from Morgenthaler Ventures and is further described here: www.canvas.vc.
About Sequoia Capital
Sequoia Capital helps founders turn imaginative ideas into enduring companies. As the “Entrepreneurs Behind the Entrepreneurs,” the Sequoia team has worked closely with legendary founders such as Steve Jobs of Apple, Larry Ellison of Oracle, Len Bosack and Sandy Lerner of Cisco, David Filo and Jerry Yang of Yahoo!, Max Levchin, Elon Musk and Peter Thiel of PayPal, Sergey Brin and Larry Page of Google, Steve Chen and Chad Hurley of YouTube, and Reid Hoffman and Jeff Weiner of LinkedIn. Sequoia is now helping the next generation of innovators build the lasting companies of tomorrow.