Scalable Capital Raises $180M+ at $1.4B Valuation - European Neobroker

The Rise of Neobrokers and Scalable Capital's Latest Funding

Neobrokers, innovative startups reshaping the investment landscape, are gaining significant traction. They broaden access to the stock market by offering smaller investment increments and user-friendly, mobile-first platforms for managing finances.

Scalable Capital Secures $180 Million in Series E Funding

Scalable Capital, a Munich and Berlin-based startup specializing in portfolio monitoring and trade execution for shares and ETFs, has successfully raised over $180 million (€150 million). This funding round, a Series E, is spearheaded by China’s Tencent and values the company at $1.4 billion.

This represents substantial growth for Scalable Capital. In July 2020, the company secured a Series D funding round of $58 million with a valuation of $460 million.

Investor Participation and Funding History

Existing investors, including BlackRock, HV Holtzbrinck Ventures, and Tengelmann Ventures, also contributed to this latest round. Founded in 2014 and commercially launched in 2016, Scalable Capital has now amassed more than $320 million in equity funding.

The swift fundraising is strategically timed to capitalize on current market conditions and fuel growth amidst heightened activity within the neobroker sector.

Growth in Customer Base and Assets Under Management

Scalable Capital currently serves 250,000 customers across Austria, Germany, and the U.K. This is a significant increase from the 80,000 customers reported in July.

Assets under management have also experienced substantial growth, reaching $5 billion compared to $2 billion in the previous funding round.

Expanding Partnerships and Potential UK Market Adjustments

Beyond direct customer acquisition, Scalable Capital is establishing itself as a neobroker partner for established banks. Current partners include ING, Barclays Bank, Siemens Private Finance, Openbank, Oskar GmbH, and Targobank.

The company is currently not accepting new customers in the U.K. The reason for this pause, potentially linked to Brexit or other factors, is under investigation.

Investment Options and Platform Offerings

The platform provides access to approximately 1,500 Exchange Traded Funds (ETFs), which are the most popular investment vehicle, accounting for over half of the assets managed.

Furthermore, Scalable Capital offers investment opportunities in around 4,000 different shares and 2,000 funds, with plans for continued expansion and the introduction of new products.

Addressing Market Demand and Future Plans

“We see huge demand to invest money in the capital markets instead of leaving it in bank accounts,” states Florian Prucker, co-CEO and co-founder of Scalable Capital. “This comes against a backdrop of record-low interest rates, growing inflation and a widening pension gap.”

The company aims to provide access to managed ETF portfolios and self-directed trading in shares, ETFs, cryptocurrencies, and funds. Plans include launching derivatives trading and continuing its mission to democratize investing.

Competitive Landscape and Industry Trends

This funding round occurs alongside similar investments in the neobroker space. Trade Republic, another German neobroker, recently secured $900 million at a $5 billion valuation.

Other European players, such as Amsterdam’s Bux ($80 million) and Vienna-based Bitpanda ($170 million), have also received significant funding.

Tencent's Strategic Investment

Notably, Tencent also led the previous funding round for Bux, demonstrating a broader investment strategy in fintech and the European region. Tencent’s other fintech investments include Viva Wallet, Nubank, N26, and Futu.

Scalable Capital's Vision and Tencent's Perspective

“Tencent complements our existing long-term partners who already represent an international investor base,” says Erik Podzuweit, co-CEO and co-founder of Scalable Capital. “Our recent funding is a major step forward on our way to becoming the leading retail investment platform in Europe.”

“Anyone thinking of investing money should think of Scalable Capital. Whether you want to invest yourself via our broker or want our wealth management solutions to do it for you.”

The Growing Appeal of Accessible Investing

Tencent’s investment is driven by the increasing demand for accessible personal investing solutions, particularly among millennials. Danying Ma, managing director of Tencent Investment, notes that Scalable Capital provides a convenient and cost-efficient investing experience.

This trend is further fueled by Tencent’s own success with WeChat, which has integrated financial services for a vast consumer base.