Why robo-advisors need more AUM to justify valuations - Business Insider

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A decade in, robo-advisers like Wealthfront and Betterment are in a tricky spot. One fintech banker says buyers and public investors will be hard to win over.

and Wealthfront, the two largest independent robos, manage $16.4 billion and $13.6 billion in invested assets, according to forms filed with the Securities and Exchange Commission in October 2019. Those figures don't include the assets in the firms' high-yield savings accounts.

Consolidation among the startups in an effort to bump up their AUMs is one potential option. But with venture capital firms pouring hundreds of millions of dollars into them, the sense of urgency to combine forces simply isn't there, Gurandiano said. "There is displacement in valuation given that revenue multiples in private markets are equivalent to EBITDA multiples in public markets," he said. , Ashley Johnson, Wealthfront's chief financial officer, told Business Insider she had ambitions to take the company public, although she did not provide a specific timeline.

"The public markets are going to be discerning around valuation for those businesses, because I think the points of differentiation from the tech perspective are nuanced and not as acute as they make them out to be," he said.fall of 2019

 

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