Aaron Schumm got to know firsthand the intricate maze of employee retirement plans as a co-founder of FolioDynamix, a wealth management fintech acquired by Actua in 2014.
In 2016, Schumm launched Vestwell, a startup that offers a cloud-based back-end service that connects some of the country’s largest financial institutions – from banks to insurers, wealth counselors and payroll providers – to corporate retirement plans.
On Tuesday, Vestwell announced the closure of a $ 70 million C-Series roundtable led by Wells Fargo Strategic Capital and Fin Venture Capital, with Goldman Sachs, Morgan Stanley, Manulife and Point72 Ventures, among others.
“From the beginning of this business, I said I want people at this table to really understand how this business works. They don’t have to be 401 (k) experts per se, but they need to understand the dynamics around it,” Schumm said. he told the Insider.
The final round brings Vestwell total funding to about $ 115 million, he added. Schumm declined to disclose Vestwell’s valuation, but said the latest fundraiser was “a healthy step from our last round.” Vestwell raised the last $ 30 million in April 2019 from a list of supporters that included Goldman Sachs.
Vestwell aims to leverage banking capital for bids
Having fun about who is at the table has created an environment that often creates trade deals with investors.
Pre-accession talks with Wells Fargo consulting firm are already under way.
“There’s a lot going on behind the scenes from a commercial point of view,” Schumm said, declining to add details on what a trade deal would be like. “These things take a long time. Business deals are not something you change and you are ready – it is a long, arduous process,” he added.
Vestwell has already signed several deals with players such as BNY Mellon, Franklin Templeton and Morgan Stanley, who are investors. They serve as one of Vestwell’s main customer acquisition channels through a network of financial advisors.
Vestwell’s business with BNY Mellon to take over Oregon state employee retirement plans is currently in beta (with about 17,000 small businesses already in the program) and will begin later this year, Schumm said. He added that Vestwell is working with two other states to create similar programs, but declined to say which ones.
In January, meanwhile, Franklin Templeton announced a partnership with Vestwell to offer new personalized, managed account services. And just this week, fintech will begin working with Morgan Stanley to leverage the bank’s advisory base and offer a new, digital retirement record product.
Schumm will spend a large chunk of the new capital increasing Vestwell’s team. Today at 140 employees, it expects to hire 70 more people across the organization, with an emphasis on software engineering and product development.
Vestwell is also looking to expand into other workplace savings tools, such as savings and health savings accounts, Schumm said.