Upside, the anti robo-advisor, raises $1.1M

Steven Loeb · July 16, 2014 · Short URL:

Upside helps financial advisors compete against automated tools like Betterment and Wealthfront

When it comes to investing in the market, technology has certainly made it easier on the user side of the business. Whereas you used to have to go to a financial advisor, and talk to them in person, now you can just use so-called “robo-advisors," such as Betterment and Wealthfront, which do the work for you. They will ask you about your goals and will recommend portfolio companies to invest in, which it will then automatically track.

Pretty awesome, right? Well, not so much for financial advisors who are now find themselves being replaced by machines. Numerous companies are looking out for the investor, but is anyone looking out for the advisor?

Yes, now one company is: Upside, a robo-advisor that works for financial advisors rather than their clients. And now it has raised a $1.1 million seed-funding round to put its plan into action.

The funding came from Cultivation Capital, SixThirty and angel investors, including Suranga Chandratillake, General Partner at Balderton Capital; Elaine Wherry, co-founder at Meebo; Bruno Bowden, Equity Partner at Data Collective; Sean Kell, CEO of A Place For Mom; and others.

The company had previously raised $100,000 from friends and family and from graduting as part of the inaugural class at financial technology accelerator SixThirty.

The San Francisco-based company provides a fully-automated, white label platform that helps registered investment advisors leverage technology and algorithms to advise, manage, and service clients who want next-generation investment services. It provides advisors with paperless account opening, portfolio selection, automated trading and rebalancing, client and advisor portals, and practice analytics in an intuitive, design-led user interface.

There are three scenarios under which advisors have to turn to a solution like Upside, Tom Kimberly, co-founder and CEO of Upside, told me in an interview.

One is when advisors get referrals that don't meet their minimum, and have to turn away clients they would want to have in five year. The next are advisors who have lower value clients, but make most of their money from just a few of their higher end clients. The platform frees these advisors up to take on smaller clients, and to have more time to spend on their more lucrative customers.

The third, and most important, scenario are those advisors who are concerned about competing with robo- advisors for the next generation of clients, who have different needs and expectations, as well as different attitudes toward technology.

These advisors, Kimberly said, are concerned about being prepared for the future, and that is why Upside is resonating with them.

"We provide an experience that mirrors that of the robo-advisor, but underneath the firm's own brand. that allows them to offer a competitive product, but underneath their own business," Juney Ham, co-founder and President of Upside, told me. "We offer a combined experience online that offers the focused user interaction of a robo-advisor, with personal interaction of financial advisor."

That human factor cannot be discounted, Kimberly said, especially in a down market.

"It's less important when markets are doing well, but it matters a lot when markets going down. Or when clients are in a transition, and have goals to plan for," he said. "A lot of financial advisors say that a big part of what they do is therapy, meaning providing support and guidance when things aren’t going as well as you want them to. They keep the client on track with goals and expectations."

The new funding will go toward investing in the technology platform, as well as to accelerate the company's sales and marketing efforts.

"The most important thing when it comes to product is that the client is happy with the solution," Ham said'  "There's a lot of things we can execute to make it easier."

In the short-term, that can mean deeper integration with broker dealers, such as TD Ameritrade, who have APIs that Upside can integrate with, to make the platform more automated and seamless. In the long-term, Upside eventually wants to try to do more on the acquisition side, by helping advisors better identify potential leads, either through organic channels, or online channels that Upside can oversee.

As for its sales and marketing efforts, the company, which currently has eight employees, plans to add another three or four by the end of this year.

"Currently investment advisors have to cobble together different providers and wind up with a solution that is disjointed and its fragmented and inefficient," Kimberly told me.  "Our ultimate vision for Upside is to be provider that makes it really easy to get all the solutions they need."

Founded in 2012, Upside currently has three investment advisors on the platform, with another five that they are in the process of working with. But many more are likely on the way.

"What's exiting for us is the opportunity and validation that we have gotten in response from the big custodians," Kimberly said, "They serve many thousands of clients, and have sometimes trillions of dollars in assets, and are very interested in working with us and making the technology work together. They see this as future of advisory space and are very keen to be on leading edge of that continued evolution."

You can find out more about Upside in the video below:

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Upside helps registered investment advisors beat the “robo-advisors” by leveraging technology and algorithms to advise, manage, and service clients who want next-generation investment services. The company’s fully-automated, white-labeled managed account platform provides advisors with paperless account opening, portfolio selection, automated trading and rebalancing, client and advisor portals, and practice analytics in an intuitive, design-led user interface.

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Tom Kimberly

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Co-founder @Upside • strategy, operations, product • financial services and retail investing @Barclays Bank, @McKinsey & Company • MBA, MA at @Yale, BA @Penn

Juney Ham

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Co-founder Upside • Airbnb Expedia Experian Shopzilla • marketing, product, growth, analytics, operations, engineering • Penn computer science