After a relatively quiet spring for wealthtech financing deals, iCapital Network announced a massive fundraising that nearly tripled the company’s total funding.
The New York-based company, which provides a technology platform to help financial advisors access alternative investments, reeled in $440 million in an investment round led by Temasek, the government of Singapore’s sovereign wealth fund. iCapital has raised a total of $679 million since launching in 2013 and around $81 billion in assets on its platform, according to the company.
The fundraising round gives iCapital a $4 billion valuation, quadrupling its $860 million valuation in March 2020,
Temasek was joined by Owl Rock, a division of Blue Owl Capital; MSD Partners, which is affiliated with Dell Technologies founder Michael Dell’s family office; Noah Holdings; and Golub Capital. The new investors plan to expand their use of iCapital to get private investments in the hands of advisors serving the high net worth marketplace, the company says.
Other early backers of iCapital — including Blackstone, UBS, BNY Mellon, Wells Fargo, Morgan Stanley and Goldman Sachs Asset Management — also increased their commitment to the company.
iCapital will use the funds to further develop its technology platform, hire additional support staff and pursue strategic acquisitions, says iCapital CEO Lawrence Calcano. In 2020, the firm used a $146 million round of funding to make five acquisitions,
“The goal is to continue to offer a broader set of tools, features and functions, as well as expand the product set that we can offer to our clients,” Calcano says.
Bringing in an investor like Temasek will also help iCapital grow its footprint in international markets, he adds.
The deal comes after wealthtech funding in the second quarter of 2021 dipped 21% over the previous quarter,
“The decrease in funding that we saw in Q2 was due to less late-stage mega-rounds from established fintech players like Robinhood, which raised two mega-rounds that drove more than half of wealth tech funding for that quarter,” says Anisha Kothapa, a senior analyst at CB Insights.
However, it’s important to note that overall wealthtech funding in 2021 has already set a new annual record, surpassing the total amount raised in 2020 in just the first six months, Kothapa says. The second quarter also saw an increase in deal activity, signalling smaller investment rounds going to early-stage startups.
Alternative investing platforms offering investors access to non-traditional asset classes were one of the major trends of the second quarter, according to CB Insights’ report. Four companies — YieldStreet, Rally, StarStock and Rocket Dollar — all secured a cumulative $121 million in new funding during the spring. They join a market of alternative investing startups that include AIX, Context 365, Zanbato, InvestX and Alto IRA.
Driving all this interest is increasing wealth held by individual investors, growing interest in diversifying portfolios, and the need for automation that makes it easier for wealth managers to access alternative investments, iCapital’s Calcano says. And the new competition just proves how attractive the market opportunity is.
But with financial backing that towers over the competition and partnerships with most of the biggest names on Wall Street, Calcano isn’t too worried about new disruptors.
“We feel pretty good about our position in the industry in terms of partnerships we have and the technology we have built and deployed globally,” Calcano says. “We will continue to invest in our business and in our technology and in our people to remain competitive.”
