StratiFi Technologies, a provider of technology solutions for investment advisors and family offices, has USD7 million in a Series A funding round that led by Anthemis Group.
Wolverine Holdings, Cboe Global Markets, HOF Capital and AngelList also participated alongside finance and technology sepcialists including Mike Curcio, E*Trade’s chief brokerage officer, Matt Hougan, Bitwise Asset Management’s global head of research, and ETF.com’s former chief executive, Matt Wyndowe, formerly Uber’s head of product partnerships and Facebook’s platform games eco-system, and Luke Powell, formerly Prosper’s director of institutional partnerships. StratiFi’s existing investors include Khosla Ventures and Y Combinator.
StratiFi’s Series A funds will further commercialise the company’s PRISM Rating technology that calculates risk scores for individual investment accounts, and also entire advisory practices. Proceeds also will help build a marketplace of risk solutions, and an educational ecosystem to help advisors and investors better understand risk-adjusted investing.
“Institutional fund managers invest through a risk-oriented lens that mitigates all surface and hidden risks,” says Akhil Lodha, StratiFi’s co-founder and chief executive. “Our technology makes it easy for advisors to do the same and to communicate complex risk exposures in ways anyone can understand.”
Indeed, risk is increasingly a key concern for investors and advisors who are confronting the realities of underfunded retirement accounts, volatile markets, historically high stock prices, and historically low bond prices. Moreover, the 2017 market year was the least volatile for the Standard & Poor’s 500 Index since 1965. By comparison, the 2018 trading year has been characterized by periods of extraordinary volatility.
“Anthemis, Cboe and Wolverine share our belief that traditional portfolio management, especially diversification between stocks and bonds, no longer truly protects investors, and often increases risks that investors think they reduced,” Lodha adds. “During a market crisis, correlations spike, and it is then, and often only then, that investors realise they are over exposed to risks they thought were diversified away.”
Sean Park, Anthemis Group’s co-founder, said StratiFi brings risk management technology to advisor desktops.
“The firm’s simple, intuitive technology means investors and their clients no longer have to worry that some random event in the financial markets, which seem to now regularly occur, will interfere with their ability to retire, or even maintain their standard of living in retirement. Anyone who is willing to simply upload some data and click a button, can begin a process and journey that is true to Anthemis’ goal of democratising finance, and creating upward spirals for investors and advisors.”
Ed Tilly, Cboe’s chairman and chief executive officer, said technological tools that translate the complexities of the market into solutions anyone can use and understand can benefit investors.
“We expect StratiFi’s offerings will introduce many advisors and investors to strategies that the most sophisticated investors have long relied upon to manage risk and maximize returns,” says Tilly.
StratiFi’s PRISM Rating technology conducts hundreds of sophisticated calculations to determine if investment portfolios are optimally managing risk and returns. The three-part process begins after an advisor uploads a client’s portfolio into the PRISM platform, which then generates a score of one to 10 that quantifies investment risk.
The PRISM scores help investors discover hidden, often misunderstood, risks that can derail their investment goals, and even undermine the stability and growth of an advisor’s practice. PRISM also suggests ways to lower risk and improve returns with risk solutions, while also connecting advisors to a marketplace of approved expert risk management firms.
StratiFi’s technology was designed for wealth advisors. The company’s solutions are easy to use so advisors can spend more time growing their practices and educating and helping clients achieve their financial goals. Over time, StratiFi’s technology learns advisor and client preferences through a machine-learning engine to provide increasingly relevant recommendations to optimise investment returns. Advisors can simply connect accounts via their custodial platforms (Schwab, TD Ameritrade, Fidelity, Interactive Brokers, E-Trade, LPL, and others).
Traditionally, this critical investment process was considered too complicated for advisors and individual investors. The investment disciplines that StratiFi’s technology has replicated are usually performed by investment teams at major financial institutions. StratiFi has essentially created an “app” that harnesses the institutional investment expertise normally reserved for the world’s wealthiest, most sophisticated investors and made it available to everyone.
“The investment world has dramatically changed in the past 20 years, and especially since the financial crisis of 2008,” Lodha adds. “And yet too many people still approach their investments in ways that were used when papers and pen, not computers, were the primary way of trading. Now, as interest rates rise, monetary policy normalises, and quantitative investors increasingly dominate markets, StratiFi’s technology can help advisors make investing safer, more predictable and less volatile.”
