Automated Investment Service Wealthfront Raises $35M From Index, Ribbit Capital | TechCrunch
Sergey Zelvenskiy stashed this in finance
Hm, Wealthfront is charging 0.25%. 800Mil AUM brings revenue to 2mil. If they raised 65 mil, that tell me that they are valued at least at 40-50x revenue valuation, if not more. WOW.
The beauty of companies whose actual revenues are a fraction of the dollars that flow through them (Airbnb and eBay and Etsy and PayPal are examples) is that they get valuations based on the dollars that flow through them, not their actual revenues.
It's a good business to be in if you can find a good one.
I think it's a bit different. Airbnb and eBay are fundamentally ecommerce store with huge browse traffic and potential for upsell.
Wealthfront in financial advisory product. There is not as much of browsing/upsell options. Their product is incredibly sticky and customer lifetime value is huge, but the growth opportunities are severally limited in comparison to ecommerce.
There are HUGE upsell opportunities -- you know these customers have a little money and aspire to be wealthy. Many many advertisers would love access to those people.
I hear you and let's hope it will work out for the wealthfront.It's not that easy in financial world.
It's really not easy. Wall Street does not like competition so they will fight Wealthfront.
Wealthfront works for Wall Street selling their funds, so... I do not see much fights there, but, who knows. I think it will be more difficult for them to expand into broader advisory role from product perspective.
You don't think of Wealthfront as disruptive to Wall Street commissions?
Not really. They sell the same Wall Street funds. Vanguard disrupted Wall Street with low cost index funds a long time ago (yet, high cost mutual funds did not disappear). I think they are aiming at the top layer of the "99%" - the people with the net worth under 500k.
These people were mostly ignored by the financial industry except for serving the 401k plans.
I see. Then I don't really understand what's different about Wealthfront at all.
Oh, The structure and inner workings of American financial industry is fascinating.