First off, congrats to the team at FutureAdvisor. Blackrock Solutions will be a good home with a capital base to support their growth.
Their deal, in light of the Yodlee deal, now provide us all with the roadmap for the remaining robo-advisors. It basically boils down to the following:
- Go for IPO? If so, need to raise much more $$ to support the cash burn and/or B2C advertising. Dilution to founders will be drastic; OR
- Do they try to find a remaining strategic buyer for the technology? Not many left and buyers will be valuation sensitive; OR
- Do they re-position and become digital “fintech dev-shops”?
Given the landscape, there is a big push now for more VC funding. But the remainder of the year looks quite crowded. One or two of the larger robos should be able to raise funds.
Strategic buyers just got smarter about valuation for the robo space, so I garner we’ll see more “terms not disclosed”. Watch all robo-advisors not in the top-3 with regards to AUM.
The smaller robos will become dev-shops selling…forgive me…solutions (a-la-Blackrock).
One thing will be fascinating to watch:
What do the strategic investors do?
What does the Blackrock deal mean for Personal Capital? What will Citi do with Betterment? My guess is that they will follow the route of Learnvest.
Finally, I know the folks at FutureAdvisor and wish them well. Personally, I was actually looking forward to some exciting robo-advisor SuperBowl ads in 2016!
Maybe next time.