Wealthtech is not quite as active as other fintech sub-segments given heavy competition from established incumbents focused on servicing high-net-worth individuals and family offices. That said, with shifting demographics, higher expectations and changes in consumer tastes driving a focus on better user interfaces and seamless desktop-to-mobile experiences, more investors are backing wealthtech-focused enterprises and acquiring startups to gain those capabilities.
In 2019, wealthtech continued to be a growing area of interest for fintech investors around the world. The year saw an evolution in funding, with many wealthtech investors focusing less on early stage companies with interesting ideas and more on those companies in their portfolios looking for follow-on investments. Data management and analysis was a key focus for investment this year, with companies looking for more effective ways to assess and report on real-time data.
A few years ago there was more focus on making early stage investments in wealthtech companies with interesting and experimental ideas. Over the last year, we've seen wealthtech investors really doubling down on their existing investments. While they've been quite particular about the valuation of their follow-on money, they've largely been focused on supporting their existing investments rather than turning them over.
The shifting needs of customers has driven the focus of wealthtech investment. Financial advisors put increasing pressure on asset managers to create very specific products and investment solutions focused on the needs of niche groups of clients such as customers interested in making sustainable investments.
*Note that PitchBook & KPMG’s delineation of wealthtech is much more specific than broader wealthtech definitions, as it is constructed from the intersection of fintech with asset management and consumer finance. Consequently, overall levels are, as expected, lower than what other data providers may report. Please refer to the report for the methodology and definitions.