Primary’s Retirement Plan Is on Vestwell, and We’re Doubling Down on Our Investment, Too

Today the workplace savings platform announces its $70 million round, led by Wells Fargo Strategic Capital and Fin Venture Capital. We’re excited to participate with a new investment from Primary, as we have done at every stage of Vestwell’s development since our initial seed check in 2017.

Written by Brad Svrluga, General Partner at Primary.

The Vestwell team.

The problem that Vestwell founder Aaron Schumm set out to solve in 2017 is one that I know well. From running a small company — and investing in early-stage founders also running small companies — I’m all too aware that traditional workplace saving and investing platforms aren’t made for us. They’re either prohibitively expensive — both for me and our employees — or incredibly restrictive, boxing me into a plan that isn’t necessarily right for our business or doesn’t flex as our needs change.

When we first met, I immediately believed in Aaron’s vision for making quality, low-cost, flexible 401(k)s more accessible to the small plan market. First, his previous startup, wealth management fintech platform FolioDynamix, continues on to this day, powering $800 billion in assets for over 100,000 advisors. Second, as we made our seed investment, our firm signed on as one of the earliest users on the platform. Everyone on our team knows this platform well; we put our retirement savings there, and have seen for ourselves just how small business 401(k)s were meant to be.

Given our experience as customers and my view from the board room, we have the conviction to continue investing in this fast-growing company. Today Vestwell announces it has raised $70 million in Series C financing. Wells Fargo Strategic Capital and Fin Venture Capital co-led the round, along with a mix of industry heavyweights and VCs, all of whom were clamoring to get a piece of the retirement future via Vestwell: Goldman Sachs, Morgan Stanley, Manulife, Point72, Nationwide Financial, Allianz Life Ventures, Northwestern Mutual, FinTech Collective, Greenspring Associates, Teamworthy Ventures, F-Prime Capital, Industry Ventures, and Commerce Ventures.

This stellar round is a result of both Aaron’s vision and the team’s exceptional execution and traction: 200% growth in 2020, despite a pandemic; partnerships with payroll providers such as Toast, QuickBooks Payroll, Gusto, Rippling, and Paylocity; a personalized managed account partnership with Franklin Templeton; and State IRA savings programs alongside BNY Mellon.

Why we like Vestwell

At its core: Vestwell is the engine powering modern-day workplace savings and investing programs, such as 401(k) and 403(b) plans. By partnering with leading financial services companies who are seeking a more flexible platform that offers a better product to their retirement plan end consumers, Vestwell is powering many of the most trusted names in retirement as they rebuild their platforms for the next generation.

Its mission: Make great workplace saving and investing plans accessible to all.

How: Its cloud-based digital recordkeeping platform — an industry first — provides the underlying architecture to support financial services and payroll partners, while bringing clients an easier, more flexible, and user-friendly experience delivered at a fraction of the cost.

The “it” factor: Most recordkeeping technology was built before the internet even existed. Batch processing and antiquated systems open up room for error and frustration. Vestwell’s cloud-based recordkeeping platform allows for configurability so that anyone can run their own retirement plan, on their terms, in a completely modern construct. What we’ve always loved about Vestwell is that rather than taking on the hugely expensive challenge of going straight to employers with a direct sale of retirement plans, they understood that the existing distribution channels in the industry are effective and deeply trusted — they just need better, more flexible products. The firm’s API-based technology can support a diverse ecosystem of financial services and fintech companies from registered investment advisors and payroll providers, to banks, broker-dealers, credit unions, insurers, asset managers, and more. Through these partnerships, Vestwell is reshaping the industry by making quality workplace savings programs more accessible and affordable, particularly in the underserved small business market where accessibility and cost have traditionally been barriers to adoption.

Why now: This market is important. Not only has the pandemic caused people to take more stock in their future savings, but the current retirement gap has even forced the government to step in. Knowing that long-term savings typically begins in the workplace, many states are beginning to mandate that workplace retirement plans be offered. Vestwell has positioned itself not just as a market leader in helping small companies provide great plans, but also in working alongside the people who sell those plans to ensure greater access. This latest round of financing will be used to further expand the team, platform functionality, and servicing for Vestwell’s thousands of partners and clients. And with the success of its recordkeeping technology, Vestwell will leverage its core infrastructure to expand into other workplace savings program areas such as 529s, HSAs, emergency savings, and IRAs.

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Primary Venture Partners

Primary Venture Partners

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A seed-stage venture capital firm responsible for backing NYC’s most promising founders. www.primary.vc.