Swiss fintech vestr could look to undergo a growth funding round in the next 18 months to further scale its trading management platform for Actively Managed Certificates (AMCs), Head of Business Development Stefan Wagner told Mergermarket.
The Zug-headquartered company expects to evaluate its financing options in the second quarter of 2021, although it would not rule out making a decision beforehand, Wagner said.
It would look to raise additional funds primarily to prefinance the onboarding of new clients, he added.
The firm is primarily VC-backed at present but would be open to approaches from strategic investors in the round, Wagner said. Strategic investors in Asia would be of particular interest, as markets such as Singapore are seeing rapid growth in the issuance of AMCs, he said.
Acquisitions could potentially be of interest if vestr finds targets that can add to its growth, such as tech firms that could make its IT system and platform more scalable, Wagner said. It would also invest funds in product development and R&D, he added.
Rather than generate fees from clients upfront, vestr brings in income as customers start using and trading on its platform, giving it a stable and predictable cash flow once they’re onboarded, he said.
Funding from a new round could be one option to help grow its customer base, he said, citing its existing cash flow as an alternative financing path.
The company is well-financed at present, having closed a Series A round earlier this year, and currently working with a “very long” run rate, Wagner said.
It has raised an undisclosed amount of funding from financial investors and business angels to date, he added.
It completed an unspecified Series A round earlier this year led by SIX FinTech Ventures, the VC arm of the Swiss stock exchange, as reported. Other backers in the company include Zuercher Kantonalbank, EquityPitcher, and the European Angels Fund, the report continues.
It prepared the Series A internally and does not expect to work with advisers for an upcoming round, Wagner said. An exit is not on the agenda, he added.
The company has developed a platform that digitizes and automates the management of actively managed certificates (AMCs) across their lifecycle, including processes such as portfolio rebalancing, investor reporting, or audit trails, according to its website.
Issuers of AMCs such as banks can use the platform to scale their business more easily: cutting down costs and time required to issue these certificates on the market and enabling them to engage in more trades, Wagner said. It also helps issuers maintain transparency on their portfolios and trades for regulators, he added.
Its platform is a white-label service that can be fully integrated with its customer’s IT systems, Wagner said. Total Assets under Management (AuM) on its platform are in the multi-billion-euro range, Wagner said. The global market for AMCs exceeds USD 1tn in AuM, according to its website.
Swiss-based bank Julius Baer is a reference customer, Wagner said, adding that one large issuer of AMCs would typically entail up to 600 users.
It has continued to grow and onboard new clients throughout the coronavirus crisis, Wagner said. It has also benefited from market volatility as a result of the pandemic, as this has led to an increase in trading fees on its platform, he added.
It expects the issuance of AMCs will continue to grow as more and more players enter the market, Wagner said.
Founded in 2017, vestr has about 20 employees at present, Wagner said. Its revenue and valuation are undisclosed, Wagner said.