As the younger generation builds assets and seeks to invest with financial advisors, there is an emerging appetite for responsible investing, where the investor is keen on ensuring that his/her portfolio matches their values. Once considered a nice-to-have, sustainable finance that’s consistent with varying environmental, social, and governance (ESG) factors is moving to the mainstream. Seeds is a software platform built for financial advisors, for financial advisors that allows them to understand the investment and value preferences of their clients and construct portfolios based on these criterions. By conducting an initial assessment with clients, advisors can build a multi-dimensional profile that allows them to construct personalized portfolios rather than just simply dropping assets into some pre-set, default bucket as many advisors have traditionally done. Adding this core capability to an advisor’s repertoire allows them to distinguish themselves in the race to secure a piece of the $30T in value of sustainable investments that are professionally managed.
AlleyWatch caught up with Seeds Investor CEO and Founder Zach Conway to learn more about the business, the company’s strategic plans, latest round of funding, which brings the total funding raised to $3.2M, and much, much more…
Who were your investors and how much did you raise?
Social Leverage, whose leadership team includes Stocktwits cofounder Howard Lindzon, led the round. We also secured additional participation from The Compound Capital Fund I, LP, the affiliated venture capital fund of Ritholtz Wealth Management, as well as financial industry veterans Ryan Shanks, chief executive officer of FA Match, and Paul Walker, former co-head of technology for Goldman Sachs. DuContra Ventures, the impact fund cofounded by actor and investor Adrian Grenier, alongside venture capitalist Ba Minuzzi, also joined. We raised $2.7M in this Seed round.
What inspired the start of Seeds Investor?
Prior to Seeds, I was running an advisory firm with my father, Michael Conway. Our tagline in that business is “Aligning Life & Wealth” because we understand how important it is to go beyond the numbers with families and to make planning truly personalized and experiential. We realized that, ironically, the investing part of their services completely lacked personalization or any form of an engaging experience. We assessed investors just through the lens of risk tolerance, we put them in cookie-cutter model portfolios where they didn’t even really understand what they owned , and then we’d have review meetings where all we really talked about was performance. We wanted a way to show people that they could reach their financial goals in a portfolio and feel re-engaged with their money in the process. But at the time, we didn’t have the software or tools to help them do it in a scalable way.
How is Seeds Investor different?
There are some firms that offer elements of what we do, but we’d argue we’re in our own category. We offer a truly co-adopted experience between advisor and investor across the entire client lifecycle.
What market does Seeds Investor target and how big is it?Seeds is designed for registered independent advisors (RIAs). At the end of 2020 there were approximately 36,000 RIAs in the US overseeing over $3.86 trillion in retail assets. Assets managed by RIAs have been growing at a 12% five-Year compound annual growth rate (CAGR).
What’s your business model?Seeds uses a SaaS subscription and traditional asset management pricing models.
How are you preparing for a potential economic slowdown?By staying lean. Our main focus is keeping our heads down on our product roadmap, continuing to support our customers growth targets while recruiting expertise when and where it’s most needed.
What was the funding process like?We focused on our network, reaching out to angel investors and early venture firms that have a clear understanding of the space and could clearly support our efforts in a tangible way beyond capital.
What are the biggest challenges that you faced while raising capital?Raising capital is inherently a “Catch 22;” the capital is necessary to fuel the business, but it takes time and energy away from the product and execution.
What factors about your business led your investors to write the check?We come from and deeply understand the wealth management space, and the product clearly address a problem in an efficient, scalable manner.
What are the milestones you plan to achieve in the next six months?Launch the product to a dozen or more of the largest platform aggregator RIAs in the country.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?Focus on investors that know the space in which you are building a solution. Don’t waste time talking to firms just because they have a name you think is important to have on your cap table.
Where do you see the company going now over the near term?Staying focused on enhancing the product to continue to align with the needs of our customer firms.
What’s your favorite restaurant in the city?Gramercy Tavern. Many places come and go in New York. Like a startup, there’s so much you need to get right to make it long term as a restaurant in this city. The few that do can become long-lasting and iconic, like Gramercy Tavern.