The Future Of Wall Street: Fintech 50 2022
Reported by Hank Tucker and Kevin Dowd
The prospect of a bear market may have retail investors frowning at their 401(k)s, but some of the firms powering Wall Street’s big banks and retail brokerage firms thrive when volatility and trading volumes climb.
Five companies with a growing behind-the-scenes presence in finance and enterprise software are on this year’s Fintech 50 list, recognizing America’s most innovative and influential fintech startups. Digital broker-dealer DriveWealth and identity verification firm Persona are both making their debuts on the list. Addepar, Carta and Trumid have all been selected for at least three years running and continue to grow while disrupting and digitizing portfolio management, capital tables and corporate debt trading, respectively.
Based on the Jersey City waterfront, an area dubbed “Wall Street West” because some financial institutions have moved back-office operations there over the last several decades, DriveWealth has been a big second-hand beneficiary of the pandemic retail investing boom. Its embedded software fulfills trades and allows users of apps like Block’s Cash App and MoneyLion to buy fractional shares of stocks. In February, DriveWealth acquired Crypto-Systems to begin applying its technology to crypto trading. In May, it poached Terry Angelos, Visa’s top crypto executive, to succeed founder Bob Cortright as its CEO.
As stock trading and other functions have moved online and onto smartphones, more startups have rushed into the crowded, but growing, identity verification and fraud prevention niche. Since launching four years ago, Persona, cofounded by 31-year-old CEO Rick Song, has quickly become an industry leader, thanks to its customizable verification process and efficient monitoring and case review configuration. Its 500 enterprise customers include Block (formerly Square), where Song previously worked as an engineer, and Robinhood.
Carta is a mainstay on the Fintech 50 and now manages cap tables (tracking share ownership and options) for 29,000 startups, up nearly 50% since last year. Its $185 million in revenue came mostly from subscription fees from these customers, and it also received commissions on $7 billion worth of secondary market transactions on its CartaX platform. While the venture market is cooling this year, CEO Henry Ward expects this secondary market to represent a growing share of Carta’s revenue–with the IPO market stalling out, CartaX presents a way for employees and early investors to cash in some of their holdings.
New York-based Trumid also remains on the list after its daily transaction volume has grown 83% to $2 billion in the last year, boosted by a new partnership with JPMorgan that began last December. Rounding out the group, Addepar doubled its valuation to $2.17 billion last June and helps wealth managers track investments in alternative assets as well as stocks as clients look for refuge from the public market’s declines this year.
Here’s more on what’s new for these companies making investing and financial services in Wall Street and Silicon Valley more nimble in 2022.
A creator of cloud-based software used by wealth managers, family offices, RIAs and other investment professionals to track and analyze client portfolios across a range of asset classes, including stocks, bonds, startup investments, real estate and collectibles. That incorporation of alternatives helped Addepar grow its client base from around 400 to more than 700 last year, as many investors pushed into alts in search of higher yields.
Headquarters: Mountain View, California
Funding: $495 million from 8VC, D1 Capital Partners, WestCap Group and others
Latest valuation: $2.17 billion
Bona fides: Hit $3.5 trillion in client assets in 2021, with an average of $15 billion coming online each week.
Cofounders: Board chairman Joe Lonsdale, 39, also a Palantir cofounder; Jason Mirra, 33, former CTO; CEO Eric Poirier, 40, former director at Palantir.
Manages capital tables for 29,000 startups, tracking ownership of shares and options, valuations and dilution when new shares are issued. Customers include Canva, Flexport and Intercom. Its growing CartaX platform provides a secondary market for shareholders and did $7 billion in transaction volume in 2021, up from $2 billion in 2020.
Headquarters: San Francisco, California
Funding: $1.1 billion from Andreessen Horowitz, Lightspeed Venture Partners, Tribe Capital and others
Latest valuation: $7.4 billion
Bona fides: Revenue grew 70% in 2021 to $185 million. Staff size nearly doubled in the last year to 1,600.
Founder and CEO: Henry Ward, 46, founded Carta as eShares in 2012.
A recent surge in retail investing has also driven a surge in DriveWealth’s retail brokerage business: Clients like Revolut, Cash App, MoneyLion and Chipper Cash use DriveWealth’s software to embed fractional stock trading and other investing tools into their own apps and platforms. Earlier this year, DriveWealth bought a company called Crypto-Systems to expand into crypto trading.
Headquarters: Jersey City, New Jersey
Funding: $550 million from Accel, Insight Partners, Point72 and others
Latest valuation: $2.85 billion
Bona fides: The number of people trading with DriveWealth’s software climbed from 7.2 million to 15 million last year, and the company’s valuation jumped more than 10x.
Founder: Executive chairman Bob Cortright, 64, who spent 30 years working in trading and markets before founding DriveWealth in 2012; he was CEO until this May, when he was replaced by Terry Angelos, 48, former head of fintech and crypto at Visa.
Makes identify verification tools used by the likes of Robinhood, Square, Brex and BlockFi to confirm their customers are who they say they are, whether they’re opening an account, making major withdrawals or trading cryptocurrencies. Persona aims to stand out from a crowded KYC (know your customer) and AML (anti-money laundering) field with its customizable, no-code platform built to adapt to the varying identity needs of different companies and industries.
Headquarters: San Francisco, California
Funding: $217.5 million from Founders Fund, Index Ventures, Coatue Management and others
Latest valuation: $1.5 billion
Bona fides: Persona claims about 500 customers, up from 100 a year ago.
Cofounders: CEO Rick Song, 31, and CTO Charles Yeh, 29; Song is a former engineer at Square, while Yeh was technical lead at Dropbox.
Electronic corporate debt trading platform allowing bond buyers to make high-stakes round lot trades on an anonymous basis or negotiate with each other on its attributed trading protocol. JPMorgan joined its trading platform and strategic network as a partner in December 2021. Citi and Goldman Sachs are also among its 636 onboarded banks.
Headquarters: New York, New York
Funding: $650 million from Point Break, Motive, Dragoneer and others
Latest valuation: $2.4 billion
Bona fides: Average daily trading volume in April was $2 billion, up 83% year over year.
Founder and Co-CEO: Ronnie Mateo, 48, founded it in 2014, recruited former Lehman Brothers credit trader Mike Sobel to be president and now co-CEO.