Bambu, a Singapore-based robo-advisor wealthtech company, announced the acquisition of a Dubai-based fintech called TradeSocio on July 13. The move sets Bambu on a path to better service advisory-led wealth markets such as the U.S. – and sets it up for a planned Series C funding round.
Ned Philips, CEO and co-founder at Bambu, says the company wants to close on a new $25 million raise in the fourth quarter this year.
Its lead investors are Franklin Templeton (also a client) and Chicago-based Peak6 Investments. Bambu has raised a total of $20 million in Series A and B rounds, Philips said.
Bambu serves the B2B market, providing robo technology for banks and asset managers, including HSBC, Standard Chartered, and BCA Indonesia, as well as Franklin Templeton. Since its founding in 2016, it has grown its clientele from Asia to the U.S., Africa, and the Middle East.
The U.S. today accounts for about 40 percent of revenues, and the TradeSocio deal is meant to position Bambu to expand there.
Back to front
TradeSocio’s expertise is in back- and middle-office aspects of robo-advisory, whereas Bambu has focused on the front office, user integration and user experience. Philips’ co-founder, Aki Ranin, has built a “predictive planning” tool from artificial intelligence.
The company’s robos are used by banks primarily to target retail and mass-affluent customers. In advised markets such as the U.S., Bambu’s tech is geared toward serving financial advisors; in the super-app world of Asia, it is more designed for mass retail users – although these decisions depend on the client. (Philips says he is also selling to Asia’s new crop of virtual banks.)
TradeSocio’s expertise is in the nitty gritty of processing orders, supporting self-managed accounts, managing broker orders, and facilitating transactions.
One aspect of the deal was to integrate the tech talent.
“They have fifty wealthtech engineers,” Philips said. “I could never hire that many people. You can’t find them.”
Broker-ish
Another is to support the complexities of doing robo in markets such as the U.S. – and to expand Bambu’s capabilities. For example, right now Bambu’s tech doesn’t allow users to access single stocks. The startup wanted to focus on wealth management, not brokerage.
However, its bank clients have been asking for some broker-like services, such as letting a customer purchase a single ETF, rather than only getting exposure to ETFs via a portfolio.
“We’re not in brokerage,” Philips said. “But [users] don’t want a separate app for brokerage. It should be combined with our wealth offering.”
He terms this a crossover to brokerage but says Bambu will not stray from its wealth-management remit.
Another aspect of TradeSocio’s tech is its fee management capabilities. Fees can become tricky to process, especially in advisor-driven markets. For example, say a customer wants to invest $1,000 in a portfolio through an advisor charging 1 percent commission. Does the client end up $990 invested, or does she have to invest $1010 to reach her goal? Do advisors or distributors accrue fees on a daily, weekly, or monthly basis? How do you manage the breakdown of fees between distributors and asset managers?
Getting this detail right is important to expanding in the U.S. and other markets, Philips said.
The company will look to addition acquisitions to fill in other gaps in complex markets. The U.S. is driven by retirement funds, shaped by legal structures such as 401(k) tax laws and laws for Individual Retirement Accounts. These need specific capabilities that wealthtech vendors need if they are to grow their B2B clientele.
Philips declined to discuss financial terms of the TradeSocio acquisition.
