American technology company
Betterment is an American financial advisory company which provides digital investment, retirement and cash management services.[2]
The company is based in New York City, registered with the Securities and Exchange Commission,[3] and a member of the Financial Industry Regulatory Authority. It is a registered investment advisor and broker-dealer.[4]
As of August 2023, Betterment had more than $40 billion of assets under management and over 800,000 customer accounts.[2][5][1][6]
History
Foundation and launch
Betterment was founded in 2008 in New York City by Jon Stein, a Columbia Business School MBA graduate,[7] and Eli Broverman, a lawyer out of NYU School of Law.[8]
Betterment, LLC was established as a Delaware corporation on April 7, 2009.[3] The parent company for Betterment LLC and Betterment Securities, Betterment Holdings, Inc. was established in Delaware on January 29, 2008.[9][10]
The company launched at TechCrunch Disrupt New York in June 2010, and won the award of "Biggest New York Disruptor".[11][12] Within 24 hours, Betterment had attracted nearly 400 early customers, and the company began talks with early investors.[13]
Operations
Betterment's business model includes three areas of business: retail investment, a platform for advisors, and a 401(k) product for businesses.[14]
The company's personalized financial advice uses principles-based robo-advisor technologies such as computer algorithms. Licensed financial advisors provide over-the-phone consultations to customers who opt for additional support.[15] Betterment's primary retail platform offers taxable and tax-advantaged investment accounts, including traditional and Roth individual retirement accounts (IRAs).[16][17]
In October 2014, Betterment launched a business-to-business offering called Betterment Institutional, subsequently renamed Betterment for Advisors, a digital platform for managing client assets using Betterment's built-in financial advice.[18] In January 2017, the Financial Planning Association (FPA) and Betterment for Advisors ran a program on digital investment advice for the association's members.[19]
In January 2016, the company launched Betterment for Business—a 401(k) platform aimed at small- to medium-sized businesses.[20] It is built on the same underlying investment strategy and generally costs less than most traditional 401(k) plans.[21] In February 2022, the business rebranded to Betterment at Work and announced the acquisition of the partner and customer relationships of Gradvisor, a platform that provides personalized college savings plans.[20][22]
In December 2020, Betterment's founder Jon Stein stepped down as CEO and was succeeded by Viacom Media Networks's former COO Sarah Levy.[23]
In November 2021, Betterment released a new logo with an icon representing a rising sun.[24]
In February 2022, Betterment announced it had acquired Makara, a cryptocurrency portfolio manager.[2] In October 2022, Betterment launched a crypto offering Crypto Investing by Betterment, in which customers can invest in crypto assets.[25][26]
In December 2022, Betterment made an adjustment to their pricing structure.[27][28][29]
Finances
Betterment has received funding from Bessemer Venture Partners, Menlo Ventures, Anthemis Group, Kinnevik, Francisco Partners, Globespan Capital Partners, Citi Ventures, The Private Shares Fund, Aflac Ventures and ID8 Investments.[30][31][32]
In September 2021, the company secured $160 million in growth capital, consisting of a $60 million Series F equity round led by Treasury and a $100 million credit facility, established with ORIX Corporation USA’s Growth Capital group and Runway Growth Capital. This financing valued the company at nearly $1.3 billion.[33][32][34]
