Swedish investment company Kinnevik, whose executive chairman Cristina Stenbeck stepped down last week, has bought $65 million worth of shares in independent robo-advisor Betterment.
According to a company statement, Kinnevik’s acquisition was part of a $100 million financing round that included previous investors Bessemer Venture Partners, a venture capital firm owned by the Phipps family, as well as Anthemis Group and Francisco Partners.
The financing round sees Betterment’s valuation rise to $700 million, compared to $450 million in a previous round, and will enable the New York-based fin tech firm to grow its business and increase product development.
Kinnevik chief executive Lorenzo Grabau discussed the deal: "Betterment is a fast-growing, independent company that has already established itself as a market leader in digital asset management. In a short period of time, it has attracted a large and loyal group of customers who are investing a growing share of their wealth through Betterment."
Grabau added: "Betterment shares many of the principles that have made other Kinnevik investment companies successful: a mission to make valuable digital services available and affordable to all, a true entrepreneurial spirit, the pursuit of continuous technical innovation, and a belief in building customer-centric businesses that contribute to their communities.”
Robo-advisers, which use computer programs to provide investment advice online, have grown in popularity since the global financial crisis, as young investors turn away from big banks and institutional investors.
According to aggregated data, robo-advisers typically charge less than half the fees of traditional brokerages, which cost at least 1% of assets under management.
Betterment is the largest independent robo-adviser based on assets under management with nearly $4 billion in customer funds; more than half of that comes from people with more than $100,000 invested at the firm.
Kinnevik’s investment in Betterment comes just one week after Cristina Stenbeck, the main shareholder of Kinnevik, stepped down from her role as executive chairman in order to find new investment opportunities in the education, healthcare, and fintech sectors. The 38-year-old is bullish on the future of robo-advisers.
Members of the Stenbeck family control almost half of the votes in Kinnevik, which posted revenues of $6.3 billion in 2014.