Vestwell, a provider of workplace savings programs, has recently secured a whopping $125 million in a funding round led by Lightspeed Venture Partners. Existing investors such as Fin Capital, Primary Venture Partners, and FinTech Collective also participated, alongside new investors Blue Owl and HarbourVest. With this latest injection of funds, the New York-based fintech’s total funding has reached a staggering $227.5 million.
The round was described by the company as “preempted”, and Vestwell has declined to disclose its valuation.
As part of the funding round, Justin Overdorff, Lightspeed’s lead fintech partner, has joined Vestwell’s board of directors.
Founded in 2016 and launched in 2017, Vestwell operates a cloud-native platform and has seen impressive growth in recent years. CEO Aaron Schumm shared that the startup has achieved a three-year revenue growth of over 1,000%, although he declined to reveal exact figures. He also mentioned that Vestwell is on track to achieve profitability in the near future.
In fact, Schumm proudly declared that Vestwell had been funded through profitability before the latest Series D funding, just last year. This comes after a successful $70 million Series C round in 2021.
Vestwell’s platform is used by over 1 million individuals working at 300,000 businesses, which has helped to save approximately $30 billion in assets over time. The company partners with financial institutions, state governments, and payroll companies to generate revenue via a monthly per-employer or “per-saver” fee. Through its partnerships, Vestwell offers various programs such as retirement, health, and education savings, including 401(k), 403(b), IRA, 529 education, ABLE disability, and emergency savings.
Earlier this year, Vestwell was selected by JP Morgan to expand its 401(k) product, solidifying its position as a leading partner for public-private partnerships.
“We empower these businesses to increase their competitive edge in reaching a significantly underserved market by helping them move on from outdated legacy platforms,” stated Schumm.
According to Schumm, Vestwell’s partnerships with state governments have proved to be particularly successful in driving more business for the company. By offering “a personalized savings experience”, the company has become the leading partner in this field and currently powers 80% of the live state auto-IRA savings programs in the US.
The latest round of funding will be used to expand Vestwell’s state savings and general savings program initiatives, as well as to enhance existing products and develop new ones. Schumm also revealed that about half of the new funds will be used for acquisitions. In July, Vestwell acquired student loan benefits provider Gradifi from Morgan Stanley for an undisclosed amount.
Vestwell’s team has grown by 40% over the last year, and currently has over 350 employees.
“We’re deeply impressed by Vestwell’s groundbreaking infrastructure-first approach to solving the systemic savings problem in the US,” said Overdorff. “They’re undeniably the dominant player and a true disruptor when it comes to the savings landscape – Lightspeed is excited to invest, and I’m proud to be joining the board and look forward to working closely alongside Aaron and his team to accelerate this company together.”
Don’t miss out on the latest fintech news – sign up for The Interchange newsletter today.