- Wealthfront’s chief financial officer, Ashley Johnson, told Business Insider in an interview that she plans to bring the robo-adviser to the public markets at some point.
- Johnson declined to give a specific timeframe, but said Wealthfront, which recently announced it reached $20 billion in client assets, already operates internally like a public company.
- The recent issues startups such as Uber, Lyft and WeWork have faced going or attempting to go public aren’t a concern for Johnson, who said the fintech has strong controls in place.
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Ashley Johnson is no stranger to the public markets. As an investment banker during the dot-com boom, she had a front-row seat as a rush of startups launched on public exchanges.
She also spent time as a partner at one of the most prestigious growth equity firms, General Atlantic, and held multiple C-level positions inside a listed company, all of which gave her insight into the private-to-public journey.
Now as the chief financial officer of Wealthfront, she has ambitions to take the robo-adviser public in the future.
“I will say we operate internally very much like a company that will be public someday,” Johnson said in a recent interview with Business Insider, adding she could not provide a precise time horizon.
“We want to be an independent company,” Johnson, who joined Wealthfront four years ago, said. “Obviously, access to capital markets is part of any independent company’s strategy.”
To be sure, the Palo Alto, California-based startup has had a volatile time in the private markets, according to media reports. In October 2014, Wealthfront raised $65 million in Series D funding led by Spark Capital at a reported valuation of $700 million.
But Wealthfront’s $75 million Series E round less than four years later, led by hedge fund Tiger Global Management, was a so-called “down round” at a valuation of $500 million, according to Bloomberg.
Wealthfront said earlier this month it had reached $20 billion in client assets, making it one of the largest robo-advisers.
Like rivals including Betterment and Wealthsimple, Wealthfront is a robo upstart in a business that’s long been dominated by human-based advice, like that on offer at big legacy wirehouse firms like Morgan Stanley and Bank of America Merrill Lynch.
But with many banks and discount brokers adding their own in-house robo advice or hybrid platforms, it can be tough for a pure-play robo to stand alone.
As fees fall across wealth products and investors opt for managing their own accounts in a market that’s gone up for the better part of a decade, the industry has grown increasingly competitive — and crowded.
And while robos have managed to do a good job disrupting the space to a degree, their low-fee model, smaller average portfolio sizes and high customer acquisition costs have made it tough sledding.
North American robo-advisers need to manage between $11.3 billion and $21.5 billion to break even, HSBC said in a March report. At the time the report was published, only Betterment ($14.1 billion) and Wealthfront ($11.5 billion) fell within that range.
The public market has been unwelcoming this year for many high-flying startups that finally made the jump. Uber and Lyft, two of the most anticipated IPOs of the year despite the companies’ wide losses, are trading well below their initial opening prices.
Meanwhile the unprofitable shared-workspace company WeWork has faced major criticism from investors after filing its S-1, putting its plans to go public in limbo.
Johnson said the company has very tight controls in place, and is confident Wealthfront won’t face any pushback when it does look to list, joking that its S-1 will be “very boring.” The biggest areas potential investors will likely be interested to get more clarity on is around how the company plans to grow, she said.
“As our company continues to evolve its business model, we’ll be doing it in a direction where predictability will be a core part of it so that when we go public, we will be a strong public company,” she said.