UK fintech WealthKernel has landed a £5m ($7m) financing to help platforms and IFAs automate tasks so they can service smaller clients at scale.
The latest investment tops up a £4.4m ($6m) Series A which first started raising funds more than two years ago, bringing its total raised to date to £10.2m ($13.9m).
WealthKernel’s founder and chief executive, Karan Shanmugarajah, told FTAdviser the firm “could have held off for a larger round”, but the value lead backer XTX Ventures presented was too good an offer to pass up.
Operating much like a digital wealth manager, WealthKernel manages processes such as client onboarding, know your customer (KYC) checks, registering trades, tax wrappers and direct debits.
The regulated broker and custodian would, for example, manage a client’s Isa on behalf of a platform or IFA with their own platform, completing all the filing behind the scenes.
The fintech firm’s prime targets for its offering as it continues to grow are tech-savvy advised platforms - such as 7IM and Parmenion - as well as larger IFAs which have or are considering investing in their own platforms.
“We automate the tasks around the products,” Shanmugarajah explained. “It’s about doing smaller clients at scale. We have built an infrastructure which we can easily fractionalise. This means we can make Sipps cheaper for smaller investors.”
“Our customer can use us in a hybrid capacity too,” Shanmugarajah added, describing its infrastructure as a set of building blocks which advisers and platforms can pick and choose from.
“For example, we might take care of the KYC, but suitability is still done by the adviser.”
WealthKernel focuses on the “bottom 70 per cent”, according to Shanmugarajah, or those with less than a quarter of a million in wealth. “The majority of IFAs don’t touch this bracket,” he added.
Having founded in 2015, WealthKernel has - until now - been working with fellow fintech firms, particularly those catering to minority groups such as Wahed Invest and its focus on Muslim wealth.
Shanmugarajah said IFA adoption of new technology simply wasn’t there six years ago, hence the adviser space was yet to become familiar with WealthKernel.
“IFAs were super reluctant back then. Though that’s changing now, we were a little too early for it,” he said.
Shanmugarajah hopes that by this time next year his company should have “some type of presence” in the IFA market.
“Large firms are realising how much more agile these smaller firms are,” the fintech founder explained. “And consolidation in the IFA and platform markets is leading to more investment in automated infrastructure.”
Shanmugarajah, who began his career in Canada, moved to London in 2010 to work for Barclays’ wealth arm, focusing on investments and discretionary portfolio management.
His co-founder, Joe Campell, is also a former Barclays employee, having been a developer.
XTX Ventures is the venture capital arm of an automated trading firm with a presence across the continent - perhaps an obvious choice for WealthKernel, which also plans to kick off its Brexit-delayed European expansion.
Other investors in WealthKernel’s latest round include Digital Horizon, Big Start Ventures, and its existing lead investor, ETFS Capita.
ruby.hinchliffe@ft.com
