UBS and Wealthfront last week called off a planned deal to sell the robo-advisor startup to the financial giant for $1.4 billion. Instead, UBS invested $69.7 million in the company at a valuation Wealthfront described as $1.4 billion.
In his comment Wealthfront discussed the close of the transaction and the latest fundraiser, and shared helpful information about its financial health, including that it will soon stop consuming cash to work.
Why do we care about a transaction that hasn’t been completed? Information. Wealthfront’s disclosures about its financial results, crossed with its newly confirmed valuation and what we know from outside sources about its assets under management, provide an interesting insight into what fintech companies might be worth today – and which might be overvalued.
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At the 2020-2021 peak of the startup arc of the latest business cycle, we saw fintech companies score highly in terms of investment attracted, valuation earned and, to a related degree, perceived consumer interest. But as we’ve seen in the results of major trading platforms such as Coinbase and Robinhood, consumer demand for investment products has declined; given the generally sluggish mood of the economy today, this is not a startling surprise.