YieldX, a portfolio management software company focused on fixed-income securities, said Monday it raised $18 million in a Series A round of funding led by Envestnet, the wealth management software behemoth used by 6,000 financial firms and 108,000 financial advisors managing $5.2 trillion in assets.
The startup was valued at $218 million in the round, up from the roughly $40 million it was valued at early this year, Adam Green, YieldX co-founder and CEO, told RIA Intel.
Previous investors also participated in the round, but YieldX declined to disclose who they are or share what stake each investor has in the company. Green said his company could reveal more details in the coming weeks, as it works to add advisory board members and senior executives. Envestnet will add one advisory board member to YieldX but Rich Aneser, chief strategy officer at Envestnet, declined to say who it would be.
“YieldX has a very unique set of capabilities that really simplify and optimize fixed-income, and we saw the benefit that that would have for the firms and advisors who use our platform,” Aneser told RIA Intel.
YieldX compliments the existing income generation and protection tools that Envestnet already offers to wealth managers, such as the FIDx’s Protection Intelligence, Envestnet said in a statement.
The investment from Envestnet expands YieldX’s reach with advisors and industry leaders, Green told RIA Intel. The company’s user base is made up of RIAs, broker-dealers, wealth managers, and fintech platforms.
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“We look at it as the number of institutional clients, and that’s where we’re really excited about the potential with Envestnet, is tapping into their massive network of thousands of enterprise firms,” Green said.
Founded in 2019, YieldX launched its first products in the fall of 2020. The company now has more than 60 employees, including quantitative analysts and software engineers. It has also expanded its platform to help wealth managers analyze client liquidity and cash management. The new capital raised will be used to hire more employees and keep building new products.
YieldX charges users a platform fee and a licensing fee, which both vary for wealth management firms and end-users, depending on the size and scale of the firm, and how they use the platform.
Envestnet is in the process of integrating YieldX’s services into their existing platforms to provide a single sign-on, making it easy for Envestnet users to access YieldX. The integration between the two companies is expected to be completed in the second quarter of 2022, but Green said YieldX began working with some Envestnet clients earlier this week.
“We built the platform in a very modular and scalable way for the end-user,” Green said. “You can use our apps, our font models, our portfolio construction, and customization tools, or API.”
The infrastructure and the user experience for wealth managers trying to source, allocate, and trade bonds and other securities is “very broken and very antiquated,” according to Green.
“We saw the opportunity to really digitize the end infrastructure and provide platforms like Envestnet, the ability to integrate this technology should be back down to their clients,” he said.
Holly Deaton (@HollyLDeaton) is a staff writer at RIA Intel and based in New York City.