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Betterment Raises $32 Million in Series C Round

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In a funding round that more than tripled the amount raised in its previous round, wealth management innovator Betterment raised $32 million from a sizable group of both new and existing investors.

Betterment’s total capital now stands at $45 million. Participating in this latest round were:

  • Anthemis Group
  • Bessemer Venture Partners
  • Citi Ventures
  • Globespan Capital Partners
  • Menlo Ventures
  • Northwestern Mutual Capital
Among the goals for the new capital cited by Betterment CEO Jon Stein is expanding the company’s range of products. This likely includes a new product for RIAs, Betterment Institutional, that the company plans to release soon.
In an interview with, Betterment CEO Jon Stein said he expects his company to have more than $1 billion under management by the end of 2014. Betterment currently has about half that amount under management right now, and Stein says that AUM is growing at a rate of 10% a month.
Betterment works by investing its customers in low-cost, index exchange-traded funds. With investments ranging from short-term U.S. Treasury bonds to stocks from emerging market countries, investors can achieve broad diversification without single-stock or liquidity risks. Asset allocation is personalized based on the short or long-term goals of the individual investor.
The company stresses that its goal is not to beat the market on a risk-adjusted basis. Instead Betterment practices “passive investing,” looking to deliver market returns at a reasonable price that is lower than that offered by traditional investment managers.
Betterment has no minimum investment or minimum account balance, though account balance is a factor in determining pricing. The company charges a management fee ranging between 0.15% and 0.35% that covers everything from trades to advisory service. The company has 30,000 customers, with an average age of 36. However, 20% of Betterment’s customers are over the age of 50.
Founded in 2008 and based in New York City, Betterment was a Best of Show winner at FinovateFall 2010. See a demo of their presentation here