Why we invested in Selma Finance
The Swiss-Finnish startup Selma Finance is a digital financial advisor which helps people to invest their money smartly instead of parking it in a savings account without any gain perspective. Many people, including myself to some extent, are used to saving their money in a bank savings account. We save for holidays, for a house, for the future. But we save the wrong way. We often hear the expression “money never sleeps”. But lying in a savings account, this is exactly what it does. Selma’s purpose is precisely to keep it awake: helping people save for their future plans while growing their capital until they need it.
Solving a problem for the Swiss population. Synergies with the Migrosbank. Driven by a passionate founder team.
This links also to the reason why we decided to invest in Selma Finance. We believe Selma addresses and can solve a problem for the Swiss population: helping people to invest for their future dreams or pension plans (Selma offers the possibility to invest in a third pillar account as well). This is not just important to us, but also in line with the values of our parent company, the Migros Group. To this day investment activities are still mainly reserved for finance acumen people or high net worth individuals benefitting from the tailored support of a bank advisor. Selma gives everybody the opportunity to invest their capital and advise them at the same time on how to do it in a smart way, depending on their personal risk profile, their saving objectives, and their income.
This service offering also resonated with Migrosbank, who showed interest in offering a solution such as provided by Selma for their clients. The willingness of Migrosbank and Selma to look into synergies and join their forces in the future to address the needs of both Selma and Migrosbank’s clients was another decisive factor in our investment decision.
Finally, we were impressed by the founders and what they achieved up to today. Selma Finance growth in the last 18 months demonstrates that the Swiss population is seeking a solution like Selma: easy to use and to understand while addressing a concern on many people’s minds: how should I invest my capital.
A market segment with lots of potential for continuous growth.
The potential of Selma’s business model becomes also visible when looking at the Swiss market. While it is by definition a small market in the world, when speaking of wealth per capita, Switzerland has actually the highest mean value with close to 600 thousand Swiss francs per adult and a median wealth per adult around 130 thousand Swiss Francs*. The Swiss market is therefore a significant one in the fintech sector. For investing their money in the future, Swiss people will keep using traditional investment banking services or, if they have the time and the knowledge, the trading platforms. However, we believe an increasing part of them will turn towards financial digital advisors for three main reasons: tailored investment strategy, timesaving solution, and similar or better return on investment. Thus, digital financial advisors such as Selma are likely to keep growing their share of the cake in the area of B2C financial services and challenging the traditional banking establishment.
This potential of growth becomes also clear when looking at the growth of the global robo-advisory market. Within two years (2017–2019), the assets under management in the US financial robo-advisory market jumped four times, reaching 757 billion USD as per Statista data. US fintech players such as Vanguard, Charles Schwab, Wealthfront, or Betterment have been active in the field of robo-advisory for quite some time and are leading this industry across the globe.
Closer to home, in Europe, Scalable Capital, a German robo-advisor, was founded in 2016 and is now managing more than 2 billion Euros with more than 80’000 customers across Germany, Austria, and the UK.**
Following the rise of robo-advisory services in the last few years, several new players entered the game as well since then and the competition will likely become harder over time. But for the moment in Switzerland, Selma is in our opinion the best financial digital advisor which addresses the investment activities in a simplified and “easy to understand” manner and provides a humankind customer support.
The minds behind Selma Finance. A clear objective.
The minds behind this seamless solution are the founders Patrik Schaer, Kevin Linser, Mikael Roos, and Valeria Gasik, who together with their talented “Selma crew” are aiming to position Selma as the reference in digital financial advisory for millennials in Switzerland.
We believe our investment, coupled with their drive and cooperation with the Migrosbank, will help them to scale their operations further and score additional awareness from the Swiss population.
We are happy to partner with Selma Finance and support them in their growth journey. The need for their solution in the Swiss market has already been demonstrated and with digital wealth management and pension planning services on the rise, the team is in a great place to address this demand even better in the future.
For more information or to take advantage of the services Selma offers check out their website: selmafinance.ch
This article was written by Yan who is a Senior Investment Manager in our team.