Pinnacle-backed wealth platform OpenInvest seeks buyer pre-Xmas
OpenInvest, the wealth administration platform founded by Powerwrap co-founder Andrew Varlamos and backed by Pinnacle Investment Management, has ramped up its search for a buyer, Street Talk understands.
Sources said the fintech is seeking a cashed-up investor to get it to the scale required to close large institutional transactions and reach profitability. OpenInvest’s mandate is to promote professionally managed portfolios over Robinhood-style DIY trading or robo-advisers, by facilitating everyday investor participation in managed funds.
Andrew Varlamos founded Pinnacle-backed wealth administration platform OpenInvest in 2017.
Street Talk understands boutique corporate adviser Acova Capital has been marketing the deal since earlier in the year, but buyers have been deterred by OpenInvest’s lack of scale. It has around $70 million under management but makes less than $1 million in annual revenue.
Tyre-kickers have also raised concerns about its high cash burn, understood to be $150,000 per month, and unit economics. In all, nearly $20 million has been invested into the business.
Sources close to the transaction said OpenInvest was in ongoing discussions with a handful of interested parties following an aborted capital raise. It has been pitched as a way for financial institutions to pick up an early-stage, high-quality technology platform. Acova is hoping to wrap up the sale before Christmas, the sources said.
OpenInvest was founded in 2017 by Varlamos, a wealth management veteran whose career includes senior roles at KPMG and wealth platform Praemium. It aimed to democratise access to professionally managed model portfolios by enabling clients like stockbrokers and financial advisers to white-label its platform and distribute actively managed funds to everyday investors.
At launch, OpenInvest was pitched as an improvement on the ASX’s mfund program, which has sought to give self-directed investors direct access to fund managers but struggled to gain much traction and is consulting on a potential wind-down.
The platform is backed by Ian Macoun’s boutique funds management shop Pinnacle, which tipped in $3 million in seed funding in 2021. This was part of a broader seed-funding round which pulled in $5 million – the remainder contributed by existing and new OpenInvest shareholders, mostly wholesale investors working in financial services.
OpenInvest has 31 live partners and white-label arrangements in place with wealth managers Hamilton Wealth Partners, Collins House and Wentworth Securities and fundies SG Hiscock and Blackmore Capital.
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