Vestwell secures $125M for businesses to support workplace savings programs

Vestwell, a company that offers the foundation for employers to manage workplace savings programs, has completed a “preempted” funding round, raising $125 million. The financing was spearheaded by Lightspeed Venture Partners and included support from existing investors Fin Capital, Primary Venture Partners, and FinTech Collective, as well as new investors Blue Owl and HarbourVest. The company, which hails from New York, did not disclose its valuation through this round of funding.

Justin Overdorff, Lightspeed’s lead fintech partner, has joined Vestwell’s board of directors as part of the investment. The company was founded in 2016 by CEO Aaron Schumm and introduced its cloud-native platform in 2017. With this latest funding, Vestwell’s total amount raised comes to $227.5 million. Schumm did not disclose specific revenue figures, but shared that Vestwell had achieved a revenue growth of over 1,000% over the past three years. He also anticipates a growth of more than 100% in annual recurring revenue and volume in 2023, with the company poised for near-term profitability.

Prior to its Series D funding round, Vestwell had managed to be self-sustained, as Schumm revealed that the company had been funded through profitability. The company’s previous fundraising effort was a $70 million Series C round in 2021.

Vestwell’s platform serves over one million employees across 300,000 businesses and has facilitated the management of almost $30 billion in assets over time. The company achieves this through partnerships with financial institutions like Morgan Stanley and JPMorgan, state governments, and payroll companies, generating revenue through monthly fees. Partnerships with these entities enable Vestwell to offer various saving programs such as retirement, health, and education, including 401(k), 403(b), IRA, 529 Education, ABLE disability, and Emergency Savings programs.

Earlier this year, JP Morgan enlisted Vestwell to expand its 401(k) product. Schumm noted that Vestwell enables businesses to improve their competitiveness in an underserved market, replacing outdated legacy platforms with innovative offerings. The company has established public-private partnerships that are invaluable in providing state governments with a “personalized savings experience,” thus expanding its business. Vestwell now powers 80% of the live state auto-IRA savings programs in the United States.

Vestwell plans to use its new funding to extend its state-savings programs and other savings initiatives, as well as to develop and enhance new and existing products, with nearly half of the funds to be used for acquisitions. Recently, the company acquired student loan benefits provider Gradifi from Morgan Stanley, though the financial details were not disclosed. Currently, Vestwell counts just over 350 employees, recording a 40% team growth over the past year.

Lightspeed’s Overdorff expressed deep admiration for Vestwell and its innovative approach to addressing the savings problem in the United States. He views the company as a leader and a true disruptor in the savings landscape, indicating Lightspeed’s excitement to invest and support Vestwell’s growth.

To wrap up, the company announced its team growth and a remarkable 40% increase in personnel over the past year. Lightspeed’s Overdorff expressed firm support for Vestwell, recognizing its groundbreaking approach to solving the systemic savings problem in the US, and is excited to be part of the company’s journey ahead.


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