SAN FRANCISCO (Reuters) - Wealthfront, a Palo Alto, Calif.-based investment-management service geared toward young professionals, said on Tuesday it raised $64 million to help build its business.
The company wanted to buttress its financial position at a time when it expects entrenched players such as Charles Schwab Corp (SCHW.N) and Merrill Lynch (BAC.N)[BACML.UL] to roll out similar services, chief executive Adam Nash said in a blog post. He added the company had not yet spent any of the $35 million it raised earlier this year.
Wealthfront helps millennials save largely through recommending a selection of index funds tailored to meet an individual’s risk tolerance. It offers frills, such as specialized tax planning services, that individuals might find difficult to do own their own, but at lower cost compared with traditional financial planners.
Spark Capital Growth led the funding round announced Tuesday, with participation from another new investor, Dragoneer Investment Group. Existing investors Index Ventures, DAG Ventures, Greylock Partners, Ribbit Capital and the Social+Capital Partnership joined the investment.
The funding round values the company at $700 million, a source familiar with the financing round said.
Financial-services companies are becoming increasingly popular with private-company investors. Peer-to-peer borrowing service LendingClub, which filed in August for an initial public offering, is the biggest among the venture-backed companies.
Reporting by Sarah McBride; Editing by Marguerita Choy