Dear Clients and Friends;
Marlin & Associates (M&A) is pleased to share our latest report on the Wealth Management Technology (WealthTech) sector.
As you will see, interest and values of many firms across the WealthTech sector have come back strong in the past two months. Several publicly listed WealthTech firms now have market values that exceed those reached earlier in the year. Most others are not far behind. As you will see, in our report, the industry continues to consolidate – especially around themes such as digitization, Social Trading and facilitating investing in Alternative Investments.
Nobody questioned the fact that the current crisis has triggered a change of society’s behavior with a need for financial services to become fully digital. Tensions between brick and mortar incumbents and flashier WealthTech startups are fueled by this rush to digitize services in order to win over new customers online while retaining their existing client base. In our world, that usually means more M&A and investment. The flood of transaction activity in July / August seems to be proving that out (more here: Page 16). Our own client pipeline mirrors that with the pent-up demand. Could a flood of investment activity be coming?
The COVID-19 pandemic will accelerate the natural selection between WealthTech companies as most did not exist 5 years ago, and hence were not confronted with the last global crisis in 2008–2009. With many early stage WealthTechs struggling to attract continued funding (except the 3 mega-rounds for Robinhood just this year (see page 5 of the report)), H2’20 could see increasing consolidation among these companies. See page 9, while Q2 financing more than doubled than Q1, the number of deals stayed low. We shall see how long it lasts.
There’s more in the report that follows.
We are available to answer questions.