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Banking big UBS introduced earlier right this moment that it’s going to buy venture-backed robo-advisor Wealthfront in an all-cash transaction value $1.4 billion.
Wealthfront, which raised simply north of $200 million whereas non-public, per Crunchbase knowledge, is one of some wealth administration companies that grew on the again of providing automated investing instruments to shoppers. Betterment ($435 million in funding, per Crunchbase) and Private Capital ($265 million in raised capital, based on the identical knowledge supply) are different associated performs.
The $1.4 billion price ticket for the UBS-Wealthfront deal issues, then, because it may affect the exit values for not solely different startups, but additionally a whole lot of hundreds of thousands of {dollars} value of invested enterprise capital.
It’s exhausting to say with full confidence whether or not the sale value Wealthfront managed to command was a powerful win for its backers. PitchBook knowledge estimates that the corporate was value $700 million in 2014 and $500 million in late 2017 when it raised its final identified spherical of capital, a $75 million sum.
At these costs, the corporate’s exit value is a win in that it represents a 2x or better a number of on its closing non-public valuations. However its exit worth can be parsable from plenty of various views: AUM, prospects and income. We’ll discover every briefly to get a greater grip on how the corporate was valued in its sale, and what UBS is getting out of the deal.
AUM, prospects, and income
In its launch, UBS mentioned that Wealthfront has “over $27 billion in property beneath administration,” or AUM. That implies that UBS is paying round 5 cents per greenback in AUM on the firm. Is that quite a bit?
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