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The barrier to entry on financial management is lowering as Nutmeg democratizes the market
The former investor in Hotmail and Skype, Tim Draper, has participated in the latest round of funding that UK-based online investment system Nutmeg has raised. Nutmeg just announced that it closed a $5.3 million VC round led by Pentech and Daniel Aegerter, the Swiss chairman of Armada Investment Group.
Another notable participant of this round was investor Klaus Hommels, who sits on Spotify’s board.
Nutmeg has plans to democratize the often elite sphere of financial management once it launches this summer. It hopes to do this by creating a web-based UI that tries to align any savings and investments with a user’s various financial and life goals. Users won't even have to pick the exact stocks to invest in because the service algorithm will be able to measure their level of investment for them.
Users can adjust their level of investment manually, as well, by adjusting risk from aggressive to balanced or cautious.
Nutmeg’s revenue model is based on an annual management fee of 1%.
Craig Anderson, a partner at Pentech, said in a statement that he believes "Nutmeg will do nothing less than re-define the entire world of investment management”.
Now those are some lofty expectations, but getting more people into the market does change a lot, we will have to see how much though.
Nutmeg is currently accepting founding members who will be able to begin investing when the service opens to the public.
Users can create diverse portfolios with a lump sum as low as £1,000 (or monthly contributions of only £100) – moving, topping-up or withdrawing their money whenever they choose.
“I started Nutmeg because there is a huge need for trustworthy and straightforward savings and investment management,” said CEO Nick Hungerford, in a statement.
“This need exists not just for the wealthy, but for everyone. I was frustrated by the lack of transparency in the financial world, and its inability to interact through the internet. We’ve been talking to people to discover what they really want, and working on building a user-friendly product for over a year. With these investors behind us we are now in an excellent position to roll out a great service.”
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