Global fintech and funding innovation ecosystem

Advisors Seek Venture-Investing Gold in Fintech

Barron's | Steve Garmhausen | Nov 2, 2020

lila 300x287 - Advisors Seek Venture-Investing Gold in Fintech Many venture capitalists believe that the fintech gold rush opportunities are behind us and wish they had grabbed initial stakes in leading digital wealth management players.

But financial advisor Steve Lockshin says there is still deep potential ahead, especially when viewed through the broader prism of decades, not years.

“I missed the beginning of the internet, and didn’t see the explosive potential,” explains Lockshin, a serial entrepreneur and the widely followed principal of Los Angeles-based RIA firm AdvicePeriod. “Fintech was another version of the internet revolution.”

See: Fintechs to play an “even more important” role coming out of lockdown, says British Business Bank

Among a group of prominent advisors-turned-venture-capitalists, the aim is to make money, for sure, but also to help accelerate the wealth management industry’s own technological evolution.

“I think it’s so important that our industry stay in the forefront of what’s happening in tech and understand how it can be applied,” says Jon Jones, CEO of Brighton Jones, a $6.8 billion-asset RIA based in Seattle. “All boats rise with the rising tide.”

To help spotlight and fund promising technologies, several advisors three years ago formed ScratchWorks, a business accelerator for fintech and wealthtech that sponsors an annual pitch competition modeled on that of the popular television show Shark Tank.

Even firms that have not earned investments directly through ScratchWorks have gained business opportunities and outside funding thanks to publicity from the platform.

See: 7 Types of Investors to Avoid Like The Plague When Trying To Raise Capital For Your Startup

Advisors tend to share similar criteria for investing in startups. From experience, they will know whether an idea effectively solves a real problem they either face now or have faced when their firms were younger.

“The conversations [within the ScratchWorks group] are as simple as, ‘We wouldn’t use this, so I won’t invest in it,’ to ‘Would it advance the smaller advisors?,’ ”  says Marty Bicknell, a ScratchWorks investor and CEO of $29 billion-asset Mariner Wealth Advisors.

For the entrepreneurs behind the startups, investments from prominent advisors mean not just funding, but instant industrywide credibility, as well as invaluable practical guidance. The companies get immediate access to all the major custodians, asset management companies, portfolio management companies, reporting firms, that are all potential sources of business.


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