A Quick Q&A with Scalable Capital

  1. Tell us what you do and what sets you apart from the competition

We are a digital wealth manager and our aim is to make investing better, not just cheaper. By using technology at the heart of our service, we are fundamentally changing the way people invest. We are not just the ‘same old’ investment concept dressed up in a new way, we are breaking new ground in the retail wealth management industry.

Using a data-driven investment approach, we focus on delivering better returns for every unit of risk an investor is willing to take. We combine active risk management with passive financial instruments (ETFs) and automatically adjust asset allocation if a portfolio threatens to violate its risk category. This creates portfolios that work in all market environments.

The idea behind our service came from a lack of confidence in the current wealth management propositions. We wanted to build a service that we would happily recommend to our friends and family. Delivering the best service to our clients was at the heart of the business from day one and will always remain so.

 

  1. Raising funding is always a major challenge for startups – yet Scalable Capital keeps making the news for their funding successes. What is the key to getting investors to back your company?

BlackRock’s investment is a fantastic validation of our work so far. As we announced in June, BlackRock was the lead investor in our €30m funding round, alongside existing investors Holtzbrinck and Tengelmann Ventures. This brings our total funding to €41m.

Their backing is mainly due to our in-house technology which automates portfolio construction, risk monitoring and risk-based changes to asset allocation. In addition, from Day 1, we have carefully designed our business to be able to efficiently scale up. We have a flexible multi-language, multi-currency and multi-custody platform that can function across multiple international tax and regulatory regimes.

BlackRock shares our vision that technology is not just a competitive advantage but a requirement for wealth management businesses to be successful in the future.

 

  1. What is the biggest mistake you’ve made so far in your startup journey?

One of our biggest challenge so far has been to calibrate how to address different clients depending on their level of engagement with investing. It is important for us to remember that all of our clients have a different level of understanding and engagement when it comes to their finances. The majority of our clients know that they should invest and are keen to learn about every detail of our approach and investment process; they appreciate our sophisticated methodology. However, we do have a lot of clients with a lower level of investment knowledge and we need to engage with them in a different way to explain the importance of opening an investment portfolio.

 

  1. Effective wealth management is the key to financial wellness but so few people manage to save enough for the future – especially women. What’s perpetuating this problem and how can we encourage more individuals – especially women – who live longer than men! – to save?

In the UK, there is currently £721 billion cash sitting in deposit accounts and Cash ISAs.   Those people trying to save for their futures by holding cash will find themselves with disappointing returns in the future. This is especially true for women as they tend to live longer than men and also earn considerably less throughout their careers. Women also tend to invest less than men (17% vs 31%, according to a recent survey we conducted). This means that many women will potentially be faced with low living standards in old age. We want to do our bit to help female savers and turn this situation around. We want to help women access the long-term growth potential of the financial markets.

We commissioned a survey, in association with YouGov in February 2017, which found that 62% of women in the UK say that they don’t have sufficient financial knowledge to invest. We believe that our service can effectively address this challenge, in addition to other concerns women have about investing. By enabling women to completely outsource their wealth management to a sophisticated and professional service, we are supporting women in a way that few wealth managers or financial advisers have done before.

 

  1. What were you doing before you set up Scalable Capital and how has this experience helped you as a founder of a new business?

I spent 7.5 years with McKinsey & Company, working from their New York, Cologne, Munich, and Dubai offices. Most of that time I worked with financial services and consumer goods clients. I then spent 3 years in Moscow as the founder & CEO of Russia’s leading home & living website Westwing.ru. This combination of financial services and e-commerce know-how has been extremely helpful when building an online investment manager which aims to make investing user-friendly and accessible.

Scalable Capital provides the exact service that I was looking for during my time as a consultant and that is what motivated me to help build this business. We provide a service that time-poor professionals can use without being ripped off. In summary; intelligent investing made convenient, transparent and low-cost.

 

  1. Running a start-up is hard work – any tips on managing stress?

When you run a startup, you need to be resilient to deal with the stress that seems to perpetually grow and not show any sign of slowing down. Exercise is one of the best stress reliefs out there. We’ve recently started offering gym classes for our employees and we’ve found it really helps to deal with stress. At the same time, working at a start-up can be hugely rewarding as well. You can accomplish a lot in a fairly short amount of time and I believe this is really energising, not just for me, but also for our excellent team.