Originally published at: Let’s get in the weeds about fintech AUM – We Never See Nothing
UBS and Wealthfront last week called off a planned deal to sell the robo-adviser startup to the financial giant for $1.4 billion. Instead, UBS invested $69.7 million in the company at a valuation that Wealthfront described as $1.4 billion.
In its note discussing the end of the transaction and its latest fundraise, Wealthfront shared some useful information about its financial health, including that it will soon stop consuming cash to operate.
Why do we care about a transaction that failed to consummate? Information. Wealthfront’s notes on its financial results, crossed with its freshly affirmed valuation and what we know from external sources about its assets under management, provide an interesting window into what fintech companies may be worth today — and which might be overvalued.
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During the 2020-2021 peak of the last business cycle’s startup arc, we saw fintech companies riding high in terms of investment attracted, valuation earned, and, to a related degree, consumer interest observed. But as we have seen in the results of major trading platforms like Coinbase and Robinhood, there has been a softening in demand for investing products among consumers; given the generally lackluster lilt of the economy today, this is not a staggering surprise.