Robo-advisers can be all the rage, but Sequoia Capital is betting that humans will always be a big part of helping people make investment decisions.
On Tuesday, the Sand Hill Road company led a $ 45 million Series B funding round at Vise, a startup that seeks to automate the time-consuming tasks of independent investment advisers while creating individualized portfolios for their clients with the AI help.
Founded about four years ago by Samir Vasavada and 20-year-old Runik Mehrotra, the company that launched its A-Series just seven months ago is once again gearing up to expand against a backdrop of continued growth during the pandemic. With around 50 employees, the company hopes to hire 50 more early next year. Investors in the December cycle also include Allen & Company, Greenoaks Capital, Creative Artists Agency co-founder Michael Ovitz and Nikesh Arora, CEO of Palo Alto Networks.
The Vise team says that by using AI and data from financial providers like Bloomberg, they can help create tailor-made portfolios for clients of investment advisers who, for example, are specifically looking for a portfolio that is respectful of environment or over-indexed to women. CEO. Then the human advisor can help personalize it even more.
“The thesis is that we believe humans are the future of reviews, and we believe AI should help them,” said Ravi Gupta, the Sequoia partner who led this cycle.
Vise derives its income from taking 0.5% fees on the assets that pass through its platform. Which begs the question: Doesn’t this model indirectly put Vise in competition with robo-advisers or stock picking apps like holding company Sequoia, Robinhood, who are also looking to get the same investment dollars at the end?
Gupta says he believes Robinhood serves a different part of the market than those who already have an Investment Advisor, and that the two can coexist.
“We don’t see Robinhood as a competitor – we think Robinhood is booming and will continue to thrive,” says Gupta, adding that clients of investment advisers tend to age while Robinhood users tend to be millennials.
While the company and Sequoia have both declined to give figures on its valuation, both say the new capital is pushing that figure up. They also declined to share figures on the company’s revenue growth, but a spokesperson for Vise said the amount its clients manage through the startup, on which it bases its revenue, increased by 50%. per month since May.
And Gupta pointed to the recent star-studded additions to the team as a positive sign. A former Chief Compliance Officer of BlackRock’s Digital Wealth division, Shah Hafiz, was recently appointed Chief Compliance Officer. The former product director of the point-of-sale loan startup Affirm, Niki Sri-Kumar has also joined as vice president of products. Two former SEC commissioners, Troy Paredes and Joe Grundfest, have joined the company’s advisory board. (Sequoia will have two seats on the board of directors of the company, held by Gupta which focuses on subsequent investments and Shaun Maguire, partner of Sequoia, which focuses on investments in start-ups.)
By age alone, this is a stark contrast to the two founders. Now both 20, the duo got their start as consultants as teenage best friends, earning hundreds of dollars an hour teaching AI at major financial institutions.
Following the entrepreneurial path, Vasavada, now CEO, graduated from high school early and moved to San Francisco, and avoided college altogether. Under pressure from her family, Mehrotra enrolled at the University of Pennsylvania. Through it all, the duo were still working on a first version of Vise.
But it soon became clear that the long distance was not ideal. Vasavada therefore crossed the country and slept on the Mehrotra dormitory floor at the end of 2018, hatching a plan to convince her family that a startup could work. Mehrotra’s family fought back with a condition they believed was impossible: to raise at least $ 1 million from investors. Vasavada and Mehrotra raised $ 2 million that year in a round led by Keith Rabois at Founders Fund and Ben Ling at Bling Capital. And while Mehrotra still gets a call “every now and then” from family members testing his resolve, the company’s current chief investment officer says he has no plans to go back to school. for the time being. With the growth of the business, “it doesn’t make a lot of sense,” he says.
EDITOR’S NOTE: This story has been corrected to state that the company was founded in 2016. An earlier version of this story suggested that the company was founded in 2019, the year it was launched.
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