- The Rollup
- Posts
- Envestnet
Envestnet
Matt Ober
August 02, 2023
Wealthtech is hard when Envestnet is the only public market comp
Was this email forwarded to you? Sign up here
When investing in wealth management, specifically wealthtech, there is always the question of how big is the TAM? The reason this always comes up is because the only public company people point to is Envestnet
Envestnet is a conglomerate, a roll-up, a mix of tons of different wealth management tools. I am a big fan of the roll-up, I even named this newsletter The Rollup, but I think Envestnet is a hard company to figure out. They have $5T+ in assets on the platform, yet the market cap is only $3.3B. You would think a company that owns so many pieces of the wealth management tech stack with so many assets under management would have a bigger market cap. Unfortunately, I think it’s miss understood and needs to be cleaned up. After working at Third Point for 5+ years, I learned from Dan Loeb that not every poor-performing conglomerate is a good activist investment and that spinning off pieces isn’t always easy, but I do wonder if the sum of the parts is worth more with the right vision and strategic nudge.
One asset that I know well, Yodlee, was acquired by Envestnet many years ago. This is the consumer transaction data company that amongst other things powers so many third-party data providers that sell transaction insights to hedge funds. The data that Yodlee has is extremely valuable and I constantly wonder if Yodlee would be more valuable if it was spun out of Envestnet. In a world of AI-driven applications, the winners will be the data owners! Yodlee is a data powerhouse and you would think the data Envestnet has and the insights it collects from all the users on all its platforms would make it a very interesting powerhouse in this AI future.
At the end of the day, wealthtech startups will have to continue to stay lean, raise at modest valuations, and change the narrative as it will continue to be a tough environment to raise money when there is only one real wealthtech public market comp. I look forward to seeing who the next big wealthtech winners will be in the next decade and who will go public to start to change the narrative. Until then, we stay lean, we build, we disrupt, and we back founders with big visions.
Reply