Vestwell, which provides the infrastructure for employers to power workplace savings programs, has raised $125 million in what the company describes as a “precautionary” funding round.
Lightspeed Venture Partners led the round, which included participation from existing backers Fin Capital, Primary Venture Partners and FinTech Collective, as well as new investors Blue Owl and HarbourVest.
The New York-based fintech declined to disclose its valuation.
As part of the round, Lightspeed fintech lead partner Justin Overdorff joined Vestwell’s board of directors.
Vestwell CEO Aaron Schumm started the company in 2016 and launched the cloud platform in 2017. It has raised $227.5 million in funding with this latest round.
While Schumm declined to disclose hard revenue figures, he told TechCrunch via email that the startup had “achieved three-year revenue growth of over 1,000%.”
“We will also grow our ARR and volume by more than 100% in 2023,” Schumm said, noting that the company is “on a near-term path to profitability.”
Vestwell, he added, “was funded through the profitability prior to this pre-series D funding.” The company’s last raise was a $70 million Series C round in 2021.
Over 1 million people working at 300,000 businesses use the Vestwell platform, which the company says has helped save nearly $30 billion in assets over time. The company works in partnership with financial institutions such as Morgan Stanley and JPMorgan, state governments and payroll companies, which generate revenue for Vestwell through a monthly per-employer or “per-saver” fee. As an extension of its partners, Vestwell says it enables a range of plans, including retirement, health and education plans, such as 401(k), 403(b), IRA, 529 Education, ABLE disability and emergency plans.
Earlier this year, JP Morgan tapped Vestwell to expand its 401(k) product.
“We empower these businesses to increase their competitive advantage to reach a significantly underserved market by helping them move on from outdated legacy platforms,” Schumm said.
Vestwell’s public-private partnerships are generating more and more business for the company by giving state governments a way to offer “a personalized savings experience,” according to Schumm.
“We are now the leading partner in this area and currently power 80% of the live government auto-IRA savings programs in this country,” he said.
The company will use the new capital to expand its government savings initiatives and other general savings programs and to improve existing and develop new products. About half of the new funds will go toward acquisitions, according to Schumm. In July, Vestwell acquired student loan service provider Gradifi from Morgan Stanley for an undisclosed amount.
Vestwell has just over 350 employees and has grown its team by around 40% in the last year.
Lightspeed’s Overdorff said his company was “deeply impressed by Vestwell” and its “pioneering infrastructure approach to solving the systemic savings problem in the US.”
“They are clearly the dominant player and a real disruptor when it comes to the savings landscape – Lightspeed is excited to invest and I am proud to join the board and look forward to working closely with Aaron and his team to accelerate this together. .”
Want more fintech news in your inbox? Join The Interchange here.
