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Robo-advisor Wealthsimple will likely raise more funding and definitely wants to IPO, CEO says

Key Points
  • Wealthsimple CEO Michael Katchen says the firm will likely raise more money to fuel its growth plans, but is "not in a rush" to do so.
  • He said Wealthsimple wants to eventually launch an IPO, but that this was still "several years out" for the company.
  • The start-up currently has more than $3 billion of assets under management and 100,000 clients under its belt.
Wealthsimple Chief Executive Michael Katchen.
Christinne Muschi | Bloomberg | Getty Images

Online investment management start-up Wealthsimple will "probably" look to raise more money to fuel its growth plans and is set on eventually going public, its chief executive told CNBC.

The four-year-old firm, backed by Canadian asset manager Power Financial, has so far raised a total of almost 170 million Canadian dollars ($129 million), and its boss said it doesn't plan on putting the brakes on growth any time soon.

"We'll probably raise some more capital over time to get us to where we want to be," Michael Katchen told CNBC in a phone interview Wednesday. "For us it's all about growth, we're growing really fast and we have partners that are willing to invest in helping us grow even faster."

"If we didn't have that, we'd have to slow things down, but given what we see is a massive opportunity over the coming five years to really reshape what investment advice services look like around the world, we don't plan to slow down."

"And so we might take on some extra capital to accelerate those efforts even further and so long as the fundamental business that we're building is attractive, we'll find other very smart investors, and perhaps Power again, to back that vision."

But Katchen added that Wealthsimple doesn't yet have a timeframe in mind as to when it will seek more capital from investors. "We're not in a rush, we're extremely well capitalized," he said.

The company's most recent round of funding, where it raised $51 million from Power Financial, was announced back in February.

Wealthsimple's platform is a robo-advisor that uses algorithms to automate financial advice and only has a handful of human advisors to answer client queries. The firm has also branched out into savings and pension products recently.

Its services are currently available in Canada, the U.S. and Britain. In the long term, Wealthsimple's boss sees the company expanding to markets beyond those three countries.

"We have plans for other markets over time as well, but we're going to focus on these three for the time being," he said, adding: "The three share a lot of very similar attributes and a lot of similar problems that we're trying to solve."

Wealthsimple currently has more than $3 billion of assets under management and 100,000 clients under its belt. Its primary aim is to make investing easier for first-time and younger investors with little experience in investing.

The firm's competitors range from established players like Vanguard and Fidelity to rival robo-advisors Betterment and Wealthfront.

Katchen said Wealthsimple wants to eventually launch an initial public offering (IPO), but that this was still "several years out" for the company.

"Our intention would be someday to take the company public," Katchen said. "We want to build one of the next great independent financial services companies, and for us that means an IPO sometime, but we're not in a rush to do that and that's kind of several years out for us."