© 2019 SourceMedia. All rights reserved.

Ellevest raises $33M, plans to expand digital products for women

Editor's Note: This story has been updated to reflect $5 million in additional funding received by Ellevest on March 27 and not yet listed in SEC filings.

Ellevest, an automated investment platform tailored to women, announced a new $33 million funding round backed by prominent investors PayPal and Melinda Gates-founded Pivotal Ventures. Helmed by former Citigroup CFO Sallie Krawcheck, Ellevest has secured approximately $62.5 million in equity funding since its founding in 2014, according to current SEC filings.

The New-York based investment platform plans to spend the new influx of capital on technology upgrades and new product categories, according to the firm.

“Women’s lives and realities are different than men’s, and I think we’ll see more and more of a demand for products designed to reflect that," Gates said in a statement. "This is an important market opportunity that Ellevest is well-positioned to tap into.”

The latest round was led by Rethink Impact and PSP Growth, according to the statement. Valerie Jarrett, senior advisor to former President Obama, and Eric Schmidt, former Alphabet executive chairman, also backed the funding.

The New York-based hybrid robo advisor manages $283 million in assets for approximately 22,800 clients, according to its latest Form ADV. While the firm’s client base is predominantly women, it has a small number of male clients, CEO Sallie Krawcheck told Financial Planning in March. She declined to specify how many men were clients at the time.

“Ellevest is still small. We’re still a startup,” Krawcheck said. “But in order to serve female clients well, we changed the product, and we engage with women in a different way.”

Sallie Krawcheck Ellevest IAG
Sallie Krawcheck, head of global wealth management at Citigroup Inc., speaks at the Leaders in Dubai 2007 conference, in Dubai, United Arab Emirates, on Monday, Nov.19, 2007. A number of high profile speakers are scheduled to address the three day conference in Dubai. Photographer: Charles Crowell/Bloomberg News

Recent funding rounds — like those of Personal Capital and Wealthfront which raised $50 million and $75 million respectively — have catapulted robo advisors to the next level of growth. Digital investing platforms have used the new funds to open new offices or offer new accounts to clients. In the next few years, assets under management on digital platforms are expected to surpass $1 trillion, according to consulting firm Aite Group.

Before the latest round of funding, Ellevest secured $32.5 million in funding in the firm’s largest Series A round in 2017 and raised the other $2 million in 2015, according to SEC filings.

Past investors have included the prominent financial services firm Morningstar and tennis star Venus Williams.

Krawcheck's goal is to “help women reach their professional and financial goals … to get women more money by closing their gender investing gap and their other gender money gaps.”

In addition to its female client base, the majority of the independent robo advisor’s employees are women, too. “We reflect our client base as opposed to reflecting that of the broader investing or Wall Street industry,” Krawcheck said, who noted that 40% of its employees are people of color and 50% of the engineering team are women. The firm has more than 80 employees, according to its Form ADV.

Ellevest charges 25 basis points for a standard plan with no minimum investment required. Fees climb as clients invest $50,000 or more. Higher fees give clients access to CFPs on staff as well as executive coaches who offer tips on salary negotiations and advice around career events.

Krawcheck was formerly CEO of Merrill Lynch Wealth Management and U.S. Trust, CEO of Citi Wealth Management and CEO of Smith Barney before co-founding Ellevest in 2014 with Charlie Kroll, who now serves as the firm’s president.

For reprint and licensing requests for this article, click here.