Flush with capital from recent fundraisings, Singapore’s digital wealth management platforms are now busy charting a new growth path — expansion to new geographies, thinking up new products and features, and hiring top talent.
Players in the sector closed five funding rounds between late March and early July, show data compiled by DealStreetAsia. In comparison, there was only one wealth tech deal in the same period last year — StashAway’s $16 million Series B led by Square Peg Capital in July.
Prominent among the recent deals are Syfe’s $30 million Series B in July, which was led by Valar Ventures, and StashAway’s $25 million Series D round in April led by Sequoia India.
Recent fundraisings by SG wealth management platforms
|Startups||Funding rounds in 2020||Funding rounds in 2021||Total funding to date||Notable investors|
|StashAway||July 27: $16m in Series C funding||April 26: $25m in Series D funding||$61.4m||Fidelity International, Square Peg Capital, Sequoia Capital India, Eight Roads Ventures, Burda Principal Investments, Asia Capital & Advisors|
|Syfe||September 23: $18.6m in Series A funding||July 14: $30m in Series B funding||$52.6m||Valar Ventures, Presight Capital, Unbound, GE32 Capital, MPGI|
|Endowus||-||March 31: $17m in Series A funding.|
July 1: $4.5m in Series A funding
|$21.5m||Lightspeed Venture Partners, SoftBank Ventures Asia, UBS, Samsung Ventures, Singtel Innov8|
|Bambu||-||Month undisclosed: $5m in Series B+ funding||$19.3m||Newton Fund, Propel(X), PEAK6 Investments LLC, Franklin Templeton Investments, Octava, Wavemaker Partners, Level39|
|Kristal.ai||January 19: $6m in Series A funding||-||$9.1m||Chiratae Ventures, WorldPeak Holdings, Desai Family Office|
StashAway, Endowus, and Syfe are robo-advisors offering diverse investment portfolios ranging from stock and bonds to REITs. Bambu, meanwhile, is a B2B firm that builds robo-advisory technology for financial and non-financial institutions, and counts clients such as HSBC, Beanstox, and Apex Clearing.
Besides the recent fundraisers, other robo-advisors in Singapore include AutoWealth and CONNECT by Crossbridge.
They provide automated, algorithm-driven investment services with little to zero human supervision.
These services witnessed sustained demand amid COVID-19. “Managing wealth became a necessity amid the low-interest-rate environment,” said Syfe’s founder and CEO Dhruv Arora, a former investment banker at UBS.
Both Syfe and rival Endowus said their user base grew 20 times in 2020.
Most users of wealth management platforms fall in the 25-45 age group — a digitally-savvy crowd hungry for yield.
“For the amateur investor, robo-advisors are attractive because they offer low fees, and ease of use, with little to no minimum-investment requirement,” Janice Lye, 29, a Singapore-based robo-advisor user, who started using the wealth management platforms last year, told DealStreetAsia.
Syfe is also seeing an increase in users aged over 50 as this demographic has much more disposable income, said Arora.
The expanding user base has resulted in a growth in Assets Under Management (AUM) for the platforms.
In July 2021, Endowus revealed that it surpassed S$1 billion ($750 million) in AUM in less than two years since its launch, while StashAway hit the $1 billion AUM milestone in January 2021 after 42 months of operations — much faster than it took one of the world’s largest digital wealth managers Wealthfront to reach the same milestone (six years).
Syfe, on the other hand, said its AUM quadrupled since the start of the year.
The firms did not reveal their actual AUM numbers.
“We believe that digital wealth management is a space where there is tremendous benefits of scale because customers that sign up stick around for 10, 15, or even 20 years,” said Abheek Anand, managing director at Sequoia Capital, which backed StashAway this year. “We have invested in similar models elsewhere — Indonesia’s Bibit and India’s Groww. These companies are doing very well,” he added.
Having received the thumbs up from investors, the startups are now charting their next leg of growth.
Syfe plans to use a part of its fresh $30 million to fund its Asia expansion.
“We will be announcing our expansion into the next market in the next 3-4 weeks,” said Arora to DealStreetAsia. Singapore is the only country that Syfe is actively marketing in currently, but the startup has customers from 41 other markets on its platform.
Similarly, Endowus is likely to launch in Hong Kong in the next six months following its licence application, its co-founder and CEO Gregory Van told DealStreetAsia. With Samsung on its cap table, a foray into South Korea, too, is “on the cards”, added Van, who was a senior manager at Grab and a UBS investment banker before co-founding Endowus in 2017.
Meanwhile, Bambu, aims to expand its reach across Asia and the Middle East. The firm recently acquired wealthtech firm Tradesocio that has offices in Singapore, India, and Dubai. The acquisition will also help it expand its product offerings into stocks and crypto.
StashAway, on the other hand, had already rolled out its platform in Hong Kong in April, following expansions to Malaysia and the United Arab Emirates last year. The startup also operates in Singapore and North Africa.
Developing new products
On the back of its April funding, Stashaway said that it will expedite the development of investment products and add new features across its five markets.
In May, StashAway launched StashAway Term Life, a group term life insurance policy underwritten by Prudential Singapore — moving closer to becoming an all-in-one wealth management platform.
Meanwhile, Endowus is planning to utilise its funding for marketing and expanding the financial products available on its platform. “We are coming up with a number of tools [and] investment portfolios that are suitable for specific goals,” Van had told DealstreetAsia earlier this month.
Similarly, Syfe plans to pump in more capital into newer investment products and services. “Customers will also be able to see a lot more customisation and personalisation in Syfe’s products based on where they are located, their goals, and preferences,” said Arora.
Syfe, despite being a robo-advisor, also has a “human touch”. It has a team of financial advisors, including former Goldman Sachs, Citibank, and Morgan Stanley employees, who are available for user consultations. Syfe’s portfolio is diversified into not just equities and bonds, but commodities as well. It was also the first to introduce an REIT-specific portfolio in Singapore.
“We saw how the [Syfe] team scaled the company across geographies, products, and asset classes,” said Christian Angermayer, founder of Presight Capital, which invested in Syfe’s seed and Series A rounds. Presight Capital is the international venture arm of Angermayer’s family office Apeiron Investment Group and has more than $2.5 billion under management.
Hiring top talent
Syfe is also stepping up hiring plans, aiming to almost double its headcount, largely on the technology side, in the next 12 months.
Similarly, Endowus aims to expand its engineering team by 50% by the end of 2021, from its current size of 30 engineers. It also hopes to expand its wealth management team by five people within the same timeframe. One of its recent hires is the former Deutsche Bank executive Wei Mei Tan who assumed the role of chief advisory officer.
According to LinkedIn, StashAway is also actively hiring across a range of roles from product marketing to frontend engineering to product design.
The demand and funding notwithstanding, these firms are also mindful of the challenges they face along the way.
Wealth management is a highly regulated industry and expansion to a new market requires licences and regulatory approvals.
Another challenge is designing the right product mix for the right markets and demographic cohorts. For example, people in their early 20s are just starting to save, while people in their mid-30s may have accumulated a little bit of wealth and need a different product.
Furthermore, there needs to be more financial education around robo-advisory services as a large portion of wealth is still stashed away as bank deposits.
“There is a lot of wealth that’s locked in very low-yielding asset classes from savings accounts to fixed deposits with relatively few people playing in the high-yielding markets. High yield does not necessarily mean higher risk. It’s just a question of careful portfolio construction,” said Sequoia Capital’s Anand. “There needs to be a fair amount of user education to take that wealth away from low-yielding assets to high-yielding assets, and that will come from better product quality, and more comprehensive products,” he added.
Meanwhile, competition is building as traditional players and superapps sense the potential.
Financial institutions such as DBS, OCBC, and UOB banks have also started offering robo-advisory services.
Southeast Asian tech giants like Grab are also vying for a slice of the pie. Grab acquired Singapore-based robo-advisor Bento in February 2020 and rebranded it to GrabInvest/AutoInvest to offer micro-loans and investment products to riders and merchant partners.
Meanwhile, Sea Group’s chief corporate officer Yanjun Wang had said in May that it could launch a wealth management service in the future.
Last December, Singapore telecom major Singtel inked a collaboration with UOB Asset Management to offer robo-advisory services to individual investors through Singtel’s Dash mobile wallet, a first-of-its-kind between a non-banking mobile wallet and a regional asset management firm.
This marks Dash’s foray into wealth management and expands the app’s range of mobile financial services offerings which includes payments, mobile remittances, and travel insurance.
The growing market, though, might ensure that all these players are accomodated.
Statista projects assets managed by robo-advisors in Singapore to grow at an annual rate of 25.3% from $1.06 billion in 2020 to $2.62 billion by 2024. Users are also expected to grow 83% to 192,500 between 2020 and 2024.