UBS and Wealthfront Last week, it called off a proposed deal to sell the robo-advisor startup to the finance giant for $1.4 billion. Instead, UBS invested $69.7 million in the company at a valuation of $1.4 billion, according to Wealthfront.
Wealthfront shared some important information about its financial health in a note discussing the closing of the transaction and its latest fundraising, including that it will soon stop using cash to operate.
Why worry about a transaction that can’t be completed? Information. Wealthfront’s notes on its financial results, combined with its newly verified valuation and what we know from external sources about assets under management, provide an interesting window into what fintech companies might be worth today, and where they might be overvalued.
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In the peak of the startup arc of the last business cycle of 2020-2021, we saw fintech companies riding high on investment attraction, realized value and consumer demand at the same level. However, as we have seen in the results of major trading platforms such as Coinbase and Robinhood, interest in investing products among consumers is decreasing. Given today’s recession, this is not surprising.
