GeoWealth, a Chicago-based asset management platform, raised $18 million in growth investment funding, with BlackRock as a new lead investor.
Kayne Anderson Growth Capital, which led GeoWealth's 2021 Series B financing, and JP Morgan Asset Management also participated in this round (the latter also invested in 2018).
According to GeoWealth CEO Collin Falls, the funding will accelerate new product development at the firm, including developing unified managed account capabilities to offer typically siled options such as direct indexing, fixed income SMAs or alternatives to a guardianship solution.
In an interview with WealthManagement.comFalls said the firm hoped to increase its product and engineering staff by 20%-30% to expand the use of TAMPs and the outsourcing of model portfolios in the RIA channel from mass affluent to high net worth sectors and from funds and ETFs to typically siled products like alt.
“I think there's been a validation across the board that alternatives are very difficult for RIAs to use, particularly systematically in model portfolios,” he said. “I don't think it's a unique idea that has been a challenge for the entire ecosystem, which is why you're seeing so much investment in alternatives and the infrastructure behind it.”
As of late last year, the GeoWealth platform supported more than $28 billion in assets, with nearly 200 RIAs managing more than 180,000 accounts with the help of GeoWealth.
The firm was founded in 2010. Its technology option helped advisors access model portfolios while offloading middle and back office needs, including performance reporting, invoicing and portfolio accounting.
In 2018, the firm completed a Series A funding round backed by JP Morgan Asset Management, followed by JP Morgan and Kayne Anderson combining for the 2021 Serie B round.
Last year, Geowealth won the First Ascent, a Denver-based flat-fee asset manager. The acquisition boosted the combined firm's assets to over $21 billion. She also collaborated with Chicago-based firm Halo Investing, which helps advisors compare, buy and manage portfolios, including illiquid investments. This enabled GeoWealth to offer customizable structured portfolios as part of a UMA.
In addition to ramping up product development, the new funding will help GeoWealth clean up its balance sheet and previous debt and provide it with “dry powder” that Falls says it can use for future opportunities. With BlackRock's fastest growing segment being custom model portfolios, he thought the partnership would be a “booster” for both firms.
Falls said GeoWealth didn't feel some of the pressures other major players in the space felt by having to continually integrate inorganic growth into the business, allowing them to focus solely on RIA.
“I think GeoWealth is still a relatively clean, early-stage business that is growing very quickly in the channel we want to focus on,” he said.