M1 Finance lands $75 million to double employees

M1 Finance announced Tuesday it raised another $75 million in funding. The latest cash influx will be used to double employee headcount to nearly 300 by year end, up from just 40 employees at the beginning of last year. 

The new financing, led by tech-focused investment firm Coatue, brings M1’s total funding to about $173 million, according to a company spokesperson. The wealthtech startup, founded in 2015 by CEO Brian Barnes, already manages $3.5 billion dollars in assets for about 500,000 user accounts. 

The announcement also comes at a time of intensified interest and funding that’s recently poured into wealthtech. Last year, funding in wealthtech set a new annual record of $3.7 billion across 157 deals through November, according to a CB Insights report

Investments in wealthtech are expected to increase this year, too, as millennial-friendly brokerages acquire large customer bases and expand product offerings. Industry trends including increased interest in sustainable investing and API integrations will serve as a catalyst for wealthtech funding through 2021.

M1 Finance is touting a similar branding message to competitors like new robo-adviser Stash, which encourages users to be interested in long-term investing instead of day trading. In fact, M1 Finance’s trading app only offers two trading windows a day. By comparison, Stash offers four trading windows per day.

“Wealth is built through long-term ownership, not gambling on short-term price movements … our focus is on improving our clients’ finances, as opposed to their financial entertainment,” said Barnes in a statement.

With a total of $173 million in fresh funding, M1 is also looking to scale its product offerings in the highly competitive robo-advice space. Currently, M1 operates as a “choose your own adventure” app that allows users to decide if they want their investing, banking and savings accounts automated, said vice president of operations Mike Savino. 

As for competition heating up in the robo-advice market as account openings surge and new players enter the space, M1 is focused on building a foundation that will be able to withstand the next wave of investor appetite for financial services apps, said Savino. 

“I believe we’re still in the first inning of this,” Savino said. “Now, we hear about Robinhood and the Webulls of the world, but overall asset flows haven’t even begun yet.” 

The wealthtechs to stay ahead of the curve will be the ones who have the product and client connected, Savino said. “It’s about who is in a good place for when those real asset flows start to move.” 

Moreover, the new fintech entrants in the wealthtech space are set to thrive as the millennial and Gen Z demographics mature, Savino said. 

“They’re trusting new financial players, which I think for a long time was the barrier,” he said. “This new generation is willing to trust using their phone or doing it on the computer and not having that personal relationship.” 

The post M1 Finance lands $75 million to double employees appeared first on InvestmentNews.

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