Vestwell raises $125M to help businesses power workplace savings programs
Summary
Vestwell, which provides the infrastructure for employers to power workplace savings programs, has raised $125 million in what the company describes as a preempted round of funding.Lightspeed Venture Partners led the round, which included participation from existing backers Fin Capital, Primary Venture Partners and FinTech Collective, as well as new investors Blue Owl and HarbourVest.The New York-based fintech declined to reveal its valuation.As part of the round, Lightspeeds lead fintech partner, Justin Overdorff, has joined Vestwells board of directors.Vestwell CEO Aaron Schumm started the company in 2016 and launched the cloud-native platform in 2017. It has raised $227.5 million in funding with this latest round.While Schumm declined to reveal hard revenue figures, he told TechCrunch via email that the startup had achieved a three-year revenue growth of over 1,000%.We will also grow our ARR and volume by more than 100% in 2023, Schumm said, noting that the company was on a near-term path to profitability.Vestwell, he added, was funded through profitability prior to this preempted Series D funding. The company operates by partnering with financial institutions such as Morgan Stanley and JPMorgan, state governments and payroll companies, which generate revenue for Vestwell via a monthly per-employer or per-saver fee. As an extension of its partners, Vestwell says it enables a suite of programs, including retirement, health and education, such as 401(k), 403(b), IRA, 529 Education, ABLE disability and Emergency Savings programs.Earlier this year, JP Morgan had tapped Vestwell to expand its 401(k) product.We empower these businesses to increase their competitive edge in reaching a significantly underserved market by helping them move on from outdated legacy platforms, Schumm said.Vestwells public-private partnerships are increasingly generating more business for the company by giving state governments a way to offer a personalized savings experience, according to Schumm.Were now the leading partner in this field, and currently power 80% of the live state auto-IRA savings programs in this country, he said.The company will use the new capital to expand its state-savings and other general savings program initiatives and to enhance existing and develop new products. In July, Vestwell acquired student loans benefits provider Gradifi from Morgan Stanley for an undisclosed amount.Vestwell has just over 350 employees, and has grown its team by around 40% over the last year.Lightspeeds Overdorff said his firm was deeply impressed by Vestwell and its groundbreaking infrastructure-first approach to solving the systemic savings problem in the US.Theyre undeniably the dominant player and a true disruptor when it comes to the savings landscape Lightspeed is excited to invest, and Im proud to be joining the board and look forward to working closely alongside Aaron and his team to accelerate this company together.