Betterment, the US-based online financial advisory service backed by financial services firm Citi, raised $100m yesterday in a series E round led by investment firm Kinnevik.
Venture capital firms Menlo Ventures and Bessemer Venture Partners, investment advisory firm Anthemis Group and private equity fund Francisco Partners also took part in the round, all as existing investors.
Betterment has built a robo-advisor that provides clients with a diversified portfolio of index-tracking exchange-traded funds that can be personalised to the needs of each user. It now manages some $4bn of funds, up from $1.1bn at the end of 2014.
The funding, secured at a $700m valuation, will be put towards product development and ‘aggressive’ growth.
Jon Stein, Betterment’s founder and chief executive, told Fortune the company purposely chose a sub-$1bn valuation to get better terms, adding in a statement: “Our goal is to become the central financial relationship for our clients.
“Over the past year, we’ve made great progress toward that goal with features like RetireGuide and account aggregation, but there is still work to do. It is the early days for us on our path to helping millions of Americans reach their financial goals.”
Betterment has now raised $205m since it was founded in 2010, having received $60m in a February 2015 series D round led by Francisco Partners that included Bessemer, Menlo and Northwestern Mutual Capital, a subsidiary of Northwestern Mutual Life Insurance.
Citi Ventures became an investor in Betterment in a $32m round in 2014, participating through its Citi Ventures corporate venturing unit and investing alongside Northwestern Mutual Capital, Bessemer, Menlo, Anthemis and Globespan Capital Partners.