Algo-Trading Firm Betterment Gets Huge VC Injection

April 7, 2016         By: Ryan Kennedy

The financial technology sector seems to have limitless solutions for the financial services market.

It is now possible to have your entire portfolio invested for you through advanced and customizable algorithms.

These robo-advisers are still in their infancy, but they appear to be gaining a lot of traction.

Betterment, one of the front runners in the robo-adviser scene, received a $100 million venture capital injection last week, giving the company a $700 million valuation.

Robo-investors (sometimes called robo-advisers) offer an automated investing scheme by which low-cost exchange traded funds (ETFs) are purchased as part of a portfolio strategy.

ETFs have long been considered a go-to investment for portfolios, especially for retirement funds, due to their low cost, performance and relatively low risk.

Now robo-investors like Betterment and rival Wealthfront offer customers the chance to have this process automated for a fee.

Kinnevik, a Sweden-based company, joined several other VC firms to invest in Betterment. Last year Betterment received a $60 million investment, giving it a $450 million valuation.

Now the company’s value is estimated to be around $700 million with the last funding round. So far, Betterment has about $3.9 billion in assets under management and growing.

Although robo-investors are growing in popularity, some investors and analysts note that the portfolio strategies offered by robo-advisers are derivative and constitute a large percentage of Vanguard funds.