DriveWealth scores $57M in new funding as use of digital investing apps soars
With the coronavirus pandemic prompting more people to use apps for all their financial needs, the behind-the-scenes fintechs that underpin digital investing are attracting renewed notice — and funding — from PE firms.
Digital trading platform DriveWealth has raised another $56.7 million, bringing its total fundraising to more than $100 million. Drivewealth is perhaps best known for helping international fintechs like Revolut and Moneylion access the U.S. securities market. The latest round was led by current investors Point72 Ventures, Raptor Group, SBI Holdings and Route 66 Ventures, as well as new investors Mouro Capital and Fidelity International Strategic Ventures.
DriveWealth grew rapidly in 2020. Companies using DriveWealth’s API-based brokerage infrastructure opened more accounts in the second quarter than E-Trade, Charles Schwab and TD Ameritrade combined, according to CEO and founder Bob Cortright. New accounts grew 33% in the third quarter from the prior period, while overall assets increased 73% from the second quarter, Cortright says.
The firm did lose a notable customer recently: digital custodian startup Altruist, which swapped DriveWealth as its clearing platform in favor of Apex Clearing. The move came down to Altruist wanting a wider selection of investment products to appeal to financial advisors than what DriveWealth offers, according to Cortight.
“We’re trying to stay in our lane,” he says. Though DriveWealth is looking to expand the investment products available, Cortright doesn’t envision having a suite of products to attract active traders like Robinhood does. “We really think of ourselves more as a savings and investing platform for people who want to trade securities, ETFs and thematic portfolios.”
Altruist did not respond to a request for comment.
At the same time COVID-19 is driving more people towards fintech, industry consolidation is also opening new opportunities for DriveWealth and other firms. With the fate of TD Ameritrade’s Veo platform still uncertain following its acquisition by Charles Schwab, some tech-forward advisors are considering new options for building cutting edge digital technology.
“Brokerage is a complex, heavily regulated industry that has historically been hindered by legacy technology and product constraints,” says Matt Ford, partner at Mouro Capital. Investors are demanding new and better digital experiences, and DriveWealth’s infrastructure can help firms deliver it, Ford says. “They have a unique, brilliant combination of deep brokerage experience and a high quality developer-first platform which is powering some of the fastest growing investment propositions around the world.”
The firm’s new funding will help it build up its brokerage technology stack, make acquisitions and add more global investing options, such as European or Asian stocks, says Cortright.
While fintech startups are DriveWealth’s “bread and butter,” the company also works with more traditional financial institutions like Navy Federal Credit Union, Cortright says.
“We’re moving into the digitization of the advisory space, helping these firms create new products for their customer base,” he adds.