Global funding for wealth management technology fell precipitously in the second quarter to $421 million in 35 deals, according to
“There’s a real change and concern if it dropped below $400 million,” he says.
O’Gara says that the market is becoming saturated with wealthtech companies and the best investments might have already been made early in the game. Now that the standards have been set, VC investors might be looking for companies that prove their model and ideas are revenue-generating, he says. “The quality of fintech firms entering the market will have to reach a higher benchmark for funding compared to past deals.”
Another reason for the deficiency of second-quarter wealthtech deals could be a change of focus on the part of VCs. In the first quarter, wealthtech companies like Betterment, Stash and Acorns had large funding rounds. Last quarter, it was software companies that were leading the deals, according to senior intelligence analyst Lindsay Davis from CB Insights.

“There’s appetite for advisors to adopt software,” she explains. The deals just aren’t as intense on the advisor-program side as the business-to-consumer side. Vestwell, a retirement investing platform for RIAs had a $30 million Series B funding with investments from BNY Mellon, Nationwide Ventures and Goldman Sachs PSI.
Last quarter, VC-backed funding was over $768 million.
But there’s a huge opportunity wealthtech is starting to take hold of, according to Davis. “These companies are solving universal pain points,” she says, because more and more firms are expanding their financial services to attract clients.
"First there was an unbundling of services and now there’ll be a rebundling,” says Davis, who adds that data collection will also play an important part in understanding consumer needs.
One of the biggest deals of the quarter involved data aggregator Plaid, which landed a
The drop in wealthtech investment comes at a time when robo and digital advisors have entered the banking industry with savings account offerings. For example,
But that’s just the beginning, industry experts say. More firms will follow, expanding their services in the quest to stake claims on Americans’ every financial need.
The biggest M&A deal in the wealthtech space last quarter was
Overall VC-backed fintech funding in the United States grew by almost $2 billion year-over-year, according to CB Insights.