In what the business refers to as a “preempted” round of investment, Vestwell, which offers the framework for employers to run workplace savings programs, has raised $125 million.
In addition to new investors Blue Owl and HarbourVest, the round was led by Lightspeed Venture Partners and includes participation from previous backers Fin Capital, Primary Venture Partners, and FinTech Collective.
The fintech company’s headquarters in New York declined to disclose its value. Justin Overdorff, the lead fintech partner at Lightspeed, became a member of Vestwell’s board of directors as part of the deal.
(Image Source: Techcrunch.com)
2016, Vestwell’s CEO Aaron Schumm founded the business, and in 2017, the cloud-native platform was introduced. In the latest funding cycle, the company secured $227.5 million. While Schumm didn’t disclose specific revenue figures, he emailed TechCrunch about the company’s remarkable three-year surge of over 1,000%. Schumm expressed confidence in the company’s imminent journey toward profitability and highlighted plans to expand Annual Recurring Revenue (ARR) and volume by over 100% in 2023.
Before this postponed Series D money, Vestwell was “funded through profitability,” he continued. In 2021, the company completed a $70 million Series C round of funding.
The Vestwell platform is used by over a million workers in over 300,000 firms. According to the company, it has gradually reduced asset values by about $30 billion. Vestwell is funded by a monthly per-employer or “per-saver” charge that it collects from state governments, payroll businesses, and financial institutions like Morgan Stanley and JPMorgan. Vestwell describes itself as an extension of its partners, facilitating retirement, health, and educational programs such as emergency savings, 401(k), 403(b), IRAs, and 529 education plans.
Vestwell was chosen by JP Morgan to broaden its 401(k) offering earlier this year.
“By helping them transition from antiquated legacy platforms, we empower these businesses to increase their competitive edge in reaching a significantly underserved market,” stated Schumm.
According to Schumm, Vestwell’s public-private collaborations are helping the company grow by enabling state governments to provide “a personalized savings experience.” “We currently power 80% of the live state auto-IRA savings programs in this country and are the leading partner in this field,” he stated.
The business plans to use the additional funding to improve and create new goods and extend its state-savings and other general savings program projects. Schumm estimates that acquisitions will account for about half of the additional funding. For an undisclosed sum, Vestwell purchased Gradifi, a benefits provider for student loans, from Morgan Stanley in July.
With a little over 350 workers, Vestwell has had a 40% increase in staff during the past year. Vestwell’s “groundbreaking infrastructure-first approach to solving the systemic savings problem in the US” has “deeply impressed” Lightspeed, according to Overdorff.
“They are undoubtedly the industry leader and a real disruptor in the savings space. Lightspeed is thrilled to invest, and I’m honored to join the board. I look forward to collaborating closely with Aaron and his team to grow this business together.”
Vestwell’s $125 million in funding represents a significant step in empowering businesses to improve workplace savings programs. This substantial investment catalyzes the company’s expansion, allowing it to deepen its support and progress in advancing these initiatives for businesses.
(Information Source: Techcrunch.com)
