DIGITAL wealth platform and adviser Endowus has completed its first round of Series A funding with S$23 million, led by Lightspeed Venture Partners and with participation from Softbank Ventures Asia.
This is the first external fund-raising for Endowus, which until now has been 100-per-cent owned and funded by its employees. It is also understood to be one of the largest amounts raised in Series A funding for a Singapore-based fintech firm.
Endowus has plans to expand in Asia, starting with Hong Kong.
The firm was founded around 2017 by six partners, with start-up capital of about S$9.5 million. It obtained its financial-advisory licence in 2018 and its initial portfolio services were for accredited investors.
Since the launch of its retail-investor services in end-2019, it says it has recorded "stellar" growth. Despite the challenges posed by Covid-19, the number of clients investing through the platform has grown 20 times, and assets under advice, eight times. It is on track to hit S$1 billion in assets under advice by the second quarter in Singapore.
Yet its success was by no means assured when it started. Endowus seeks to lower the cost of investing for individuals. This means no sales charges for funds and no trail fees, which suggests thinner margins for the firm. Trail fees are the portion of funds' annual management fees paid to the distributor. To this end, it on-boards the institutional share classes of funds, whose annual management fees may be half of retail fund fees. If that isn't available, it rebates trail fees to investors.
Its founding partners include chief executive Gregory Van, who began his career as a UBS investment banker, and chief financial officer You Ning San, whose career included stints at Goldman Sachs and Blackstone Private Equity. Samuel Rhee, Endowus chairman and chief investment officer, was formerly CEO and CIO of Morgan Stanley Asset Management in Asia.
Said Mr Van: "We're humbled but excited to have the confidence of Lightspeed and Softbank Ventures Asia ... in support of our mission to help Singaporeans invest better across all their wealth - cash, CPF and SRS (Supplementary Retirement Scheme).
"The success we've seen in Singapore this past year proves that our solutions are meeting the needs of investors, with one in two clients acquired on our platform investing across multiple wealth streams. With the same rigour, we will expand our offerings to other key markets in the region, starting with Hong Kong."
Mr Rhee said Endowus will use the additional resources and support of VC partners to go "deeper and broader in the Asia market, where we want to continue helping all investors to achieve their investment goals".
Lightspeed Venture Partners Harsha Kumar said: "Endowus' mission to solve saving and investing for individual investors and meet global retirement challenges aligned with our understanding of what was needed in the market. Their innovative business model, ambition and commitment to a higher standard of fiduciary duty speaks of a team that is at the cutting edge of the fintech space."
Lightspeed is a global venture capital firm, managing over US$10 billion. Its portfolio companies include Grab and Snapchat.
Cindy Jin, partner at Softbank Ventures Asia, said: "We are excited to be supporting Endowus in the next stage of its exciting growth. As the first and only CPF digital adviser, Endowus is clearly the leader in digital wealth, has a differentiated business model and the strongest team in the WealthTech space in the region." Softbank Ventures Asia is the early-stage venture arm of the Softbank Group.
The firm recently launched ESG (environmental, social and governance) multi-asset portfolios. In the past year, it also launched a cash management solution Cash Smart, and Fund Smart, which enables investors to build portfolios from trail-fee funds curated by the firm.