Scalable Capital, a fintech startup launched by a group of former Goldman Sachs employees, has launched in the UK and raised £5.6 million in a Series A funding round.
Scalable Capital, coheadquartered between London and Munich, received the funding from existing investors Holtzbrink Ventures, Peng T. Ong’s Monk’s Hill Ventures, The German Startups Group, and MPGI.
The company, which counts at least four Goldman employees among its founding team as well as the former VP of Barclays Capital, has now raised £8.8 million in total for its “robo-advisor” platform that allows people to make online investments into digital portfolios that suit their risk appetite.
Adam French, former executive director of Goldman Sachs’s trading division and MD of Scalable Capital, told Business Insider ahead of the funding announcement that “this is something retail investors have never had access to before.”
Scalable Capital’s tech uses forward-looking projections, based on recent market developments, to measure the level of risk in the ETF (exchange traded fund) products the client is invested in and then reallocates their portfolio according to their risk category.
In contrast to traditional and other digital wealth managers, Scalable Capital claims to adopt a fluid approach to the weighting of asset classes in its portfolios. This can help investors to capitalise on markets where risk is rewarded, and limit exposure to excess risk in more volatile conditions.
Robo-advisors are the talk of the town at the moment. Other robo-advisors include Nutmeg, MoneyFarm, and Wealthfront in the US.
“These firms are part of the first wave of digital investment managers,” said French when referring to the competition. “You go through an on-boarding process [with them] and you’re given risk label [but the platforms] don’t tell you how much absolute risk is in your portfolio. Could it be 10% or 20%? We give a statistical number.”
Scalable Capital said it expects the latest funding round to support its growth over the next year to a year-and-a-half.