Compound: Financial Management for Tech Employees

Compound Secures $25 Million to Simplify Wealth Management for Tech Professionals

Jordan Gonen and Jacob Schein, both experienced in the technology sector, identified a gap in their own financial understanding. Similar to many tech industry employees, these software engineers possessed equity in startups, cryptocurrency holdings, and other assets that were not easily converted to cash.

Identifying a Need in the Market

They sought a method to monitor their holdings and receive guidance regarding investments and tax obligations. However, they found that conventional financial institutions and automated investment services didn’t offer straightforward or comprehensive solutions designed for individuals with such diverse asset types.

This realization led to the founding of Compound almost three years ago. Compound, a participant in the 2019 Y Combinator program, positions itself as a complete wealth management platform.

A Holistic Financial View

The platform aims to provide users with a complete overview of their financial standing, encompassing both liquid and illiquid assets. This includes traditional holdings like cash and securities, as well as more modern investments such as cryptocurrency, real estate, and venture capital.

Extensive User Research

I recently interviewed Compound’s CEO, Jordan Gonen (also a former classmate), to learn more about the company’s development. Prior to launching Compound, Gonen and Schein conducted over 1,300 consultations with tech employees, founders, and investors to thoroughly understand their financial planning requirements.

“Our company’s origin lies in addressing our own challenges,” Gonen explained. “We published an article concerning equity compensation which resonated strongly within the tech community, and subsequently began assisting those who contacted us.”

Providing Comprehensive Financial Advice

Gonen and Schein offered advice on a wide range of financial matters. This included guidance on exercising stock options, establishing estate plans, and diversifying portfolios following an initial public offering (IPO).

These conversations proved invaluable, enabling them to attract talent from prominent tech companies – including Coinbase, Goldman Sachs, and Plaid – to participate in their Series B funding round, which was announced today.

Series B Funding Details

Compound successfully raised $25 million in this round, led by Greenoaks and Lachy Groom, a former product manager at Stripe. Additional investors included Y Combinator, XYZ, SciFi, Day One Ventures, Silver Lake’s Egon Durban, FTX CEO Sam Bankman-Fried, and various angel investors.

This Series B investment brings the company’s total funding to $37 million.

Current User Base and Target Audience

According to Gonen, Compound currently serves “hundreds” of users. The company doesn’t focus on a specific net worth bracket, instead working with clients at various stages of their careers.

A Unified Platform for Financial Management

Compound strives to be a central hub for users to view their overall financial position. It utilizes integrations to connect with different investment platforms for stocks, cryptocurrency, and other less liquid assets.

While Gonen didn’t disclose the exact number of platforms integrated with Compound, he noted that the company also employs readily available integrations for exchanges that aren’t formal partners.

Tracking Complex Assets

For assets held in particularly complex arrangements, Compound tracks them manually. Regarding tax filing, the company collaborates with platforms and offers an in-house service through a tax firm it owns.

Future Growth Plans

Gonen intends to significantly expand the team, which currently comprises approximately 50 employees, utilizing the newly acquired funds.

“Individuals should aim to optimize their finances on a global scale, rather than focusing on isolated situations,” Gonen stated. “However, many clients approach us during significant life events.”

He continued, “These events often involve decisions about exercising stock options, considering loans to facilitate option exercises, evaluating relocation options, diversifying after a liquidity event, or determining the appropriate amount for angel investing. Compound provides a single platform to address all these questions.”