Their focus on long term wealth preservation makes family offices reliant on the systems and digital solutions at hand that enable it, meaning the ecosystem is inextricably linked to WealthTech. It’s thus not surprising to see the increasing engagement between family offices and the broader world of FinTech (WealthTech being just a $5 billion subset within this far larger market).
Anyone attending FinTech events would have noticed this increased interaction, and in the buildup to Singapore FinTech Festival this week, the largest annual event of its kind with over 60,000 attendees, there is a heightened level of discussion within the family office community and technology ecosystem, which will have a visible presence there through involvement with exhibiting companies as well as participation on panels. There were also a multitude of WealthTech solutions present, focussed on the APAC market including Additiv, Optimai, Finnate.ai & Privé Technologies (and several others setting up physical offices in the region, including Eton Solutions).
But zooming in — WealthTech is booming. An increase in technology demands together with the desire to achieve greater efficiencies at lower costs have helped create a thriving industry filled with innovative companies utilizing emerging technologies to meet new expectations.
AI, big data and blockchain technology have been the dominating themes within FinTech recently, and with family offices themselves benefiting from the new solutions they’re often involved in funding, it makes sense that these three themes play a significant part of the digital transformation underway in family offices.
They’re also central to many of the companies involved in what has been a busy year of financial activity, with some significant funding rounds and acquisitions taking place. This movement and the amount of capital deployed suggests a strong belief in the demand for tech products focused on the private wealth industry, but also other areas of technology for family office operations and lifestyle management.
A month after the recent Simple report on the state of the family office software and technology landscape, let’s look at some of the notable activity that’s occurred in the last 12 months that relates to both ultra-high net worth individuals (UHNWI) and the family office ecosystem.
Startup funding that emphasize market demand for Fintech & WealthTech solutions.
As expected, there has also been significant movement on the startup side too, where a common focus is stepping in to deliver where there has been slow progress made by larger financial institutions that can’t seem to move away from complex legacy systems.
One example of this is Danish startup Performativ, who just last week announced it raised $5.8 million to both reach more customers and enhance their software suite, which is aimed at making wealth management a far more intuitive process. One of their key investors is Koh Soo Boon, founder of Singapore’s first female-led venture capital firm, again proving the international interest in the space.
Similarly in Sweden, portfolio management, analysis and reporting platform Swimbird recently announced a third funding round of $2.7 million, much of which will be allocated to their AI-driven data mapping tool, specifically created to offer an evolved alternative to traditional methods.
Rounding off the Nordics is Finnish company Jay Solutions, which went through a $9 million management buyout earlier this year in a show of belief for their data aggregation and analysis platform which has an emphasis on user-friendly visualization, something that larger financial institutions have struggled with.
Acceleration through acquisition growing the market as a whole
Looking at shifts in the market from an acquisitions perspective, there were several notable transactions over the last 12 months, including MSCI completing an acquisition of private asset data and analytics platform, Burgiss, for $697 million, to enhance their investment research solutions.
Another is Pennsylvania-based STP Investment Services, which acquired the accounting, portfolio management and reporting platform, WealthSite, at the end of last year. While the transaction was for an undisclosed amount, it brought their assets under administration to over $400 billion, though the primary motive was to accelerate their own proprietary platform which aims to offer their family office and other end investor clients a premium digital analytics and reporting solution.
And in the first quarter of 2023, wealth management platform Masttro announced it received a $43 million private equity investment. Founded in 2010 and with offices in the US, Switzerland and Mexico, the company isn’t new but this investment and its recent growth, a reported tripling in size over the last three years, is a reflection of the demand for software solutions aimed at UHNWIs and family offices.
Opportunity for emerging solutions
A handful of emerging solutions also caught the eye of late, some already having gained attention within the media like United Kingdom-based Vega, which aims to streamline and optimize portfolio management across both private and public markets from a single platform. Founded by a team with experience at Blackstone, KKR and Revolut, the company launched in September with $8 million in backing.
Formed to solve the host of operational challenges related to workflow, administration and data management in alternative investments, New York-based Arch has just announced that it raised $20 million in Series A funding, which will allow them to enhance their platform that integrates with existing wealth management and reporting systems.
Still in beta but with an attractive proposition is Sandbox Wealth, a personal financial management tool that is built to work in tandem with investment advisors to provide an enhanced banking and borrowing experience, complimented by AI-driven insights and trends analysis.
Another early-stage solution with a strong focus on family offices is PrizmaDesk, a portfolio management and analysis platform aimed at both wealth owners and advisors. The platform was born from a consolidation system built specifically for a single family office that saw its greater value on completion and invested to support its evolution into an independent product.
There are still many early stage WealthTech companies that will also be ready for further rounds of funding and family offices could be ideal partners here. It’s not often that family offices see opportunities where they see themselves as the users or clients of the companies. For that reason, this brings with it a great opportunity for family offices not only to invest in solutions that they are able to benefit from themselves but also grow the industry and ideally even generate some good financial returns.
These aforementioned WealthTech companies and outlined activity reflect just a portion of the total ongoing movement within the software and technology space relating to family offices. Ongoing digital transformation and the demand for innovative solutions that are not being offered by larger financial institutions look set to help drive this forward, and as we head towards the end of this year, it’s already exciting to think about what is coming our way in 2024.