Morgan Stanley Backs $385M Round for Fintech Vestwell
Morgan Stanley has invested in fintech firm Vestwell as part of a $385 million funding round to expand its AI-driven savings solutions. The deal highlights a trend of financial sponsors and asset managers investing in platform technologies to create value. This approach often involves growth equity to scale tech-enabled service models.
- This Series E funding round was led by Blue Owl Capital and Sixth Street Growth, with JPMorgan acting as the placement and structuring agent. Other new and existing investors included Neuberger Berman, Franklin Templeton, and TIAA Ventures. - The deal doubles Vestwell's valuation since its 2023 Series D round, bringing it to approximately $2 billion. This fundraising brings the total capital raised by the company to $660 million. - Vestwell operates as a B2B2C infrastructure provider, offering a white-label platform for various savings plans, including 401(k)s, 529 education savings, and emergency savings accounts. This model allows them to partner with employers, financial institutions, and government programs to distribute their services. - The company powers the savings infrastructure for over 40 government programs and supports over 2 million active savers, with more than $50 billion in assets on its platform. It has also expanded through acquisitions, such as purchasing Gradifi Solutions from Morgan Stanley in 2021 and recently acquiring Accrue 401k. - Vestwell's platform is designed to integrate with over 190 payroll providers, which streamlines administration for employers and aims to make savings more accessible to employees. - The investment in Vestwell reflects a broader trend in fintech where investors are prioritizing profitable infrastructure firms with established government partnerships and payroll integrations. This move aligns with the industry's shift from direct-to-consumer apps to embedded finance solutions. - Prior to this investment, Morgan Stanley had a pre-existing relationship with Vestwell, having sold its student loan benefits provider, Gradifi Solutions, to the company in 2021. This deal deepens the ties between the two firms.
