Niche wealth management software startup Nest Egg has raised $5 million in its latest round of financing led by OceanFirst Bank and Republic Bancorp as the Conshohocken firm has added nine new customers since last August and plans further growth.
Nest Egg’s software platform mixes robo-advising with one-on-one human interactions for community banks and credit unions. The firm was co-founded in 2018 by CEO Michael Church and President Arden Miller — two high school classmates from the George School in Newtown. Church also founded and runs Nest Egg’s sister company Addison Capital, a traditional registered wealth advisor for high-net-worth clients.
Nest Egg’s product is designed for customers who can’t invest enough to access high-net-worth financial advisors like Addison but want more human interaction than what’s offered by online robo-advisors.
With Nest Egg, customers looking to invest between $1,000 and $500,000 answer questions to determine their goals and risk tolerance. Nest Egg then matches them with an investment plan. Bank customers can access the service online or through a kiosk at bank branches, where they can video chat live with a Nest Egg team member to get questions about their portfolio answered. Nest Egg and the bank split an asset management fee. The hybrid model is designed to capture younger, digitally savvy consumers as well as older customers who are more likely to want to go to a physical branch location and talk face-to-face with an expert.
The platform was only in use by OceanFirst and Phoenixville Federal Bank & Trust until last August when it began adding the first of nine more financial institutions to its roster of partners — none of which are local. One of the newcomers in Louisville, Kentucky-based Republic Bancorp, which has $6.1 billion in assets and locations in Ohio, Tennessee, Indiana and Florida. Toms River, New Jersey-based OceanFirst (NASDAQ: OCFC), which has $13.6 billion in assets, has been an investor since prior to the company's official launch.
Nest Egg services are now accessible to nearly 1 million bank customers at over 100 locations in 12 states. And the company said it is slated to finalize several new partnerships in 2023.
Miller said NestEgg raised money in 2018 and 2019 but when Covid-19 hit in 2020, it became hard to pitch banks about new initiatives. He said that start to change last summer when conversations with financial institutions began to heat up.
Church believes the pandemic ultimately worked in NestEgg’s favor. While new business activity with banks was paused, customers became more familiar and accepting of working digitally with a human being.
“And one of the areas that we always kind of parallel our business to is telemedicine,” Church said. “People got very much more comfortable with the telehealth model, as well as just using Zoom and speaking to people over video in general. So it was this great convergence of activities where the banks finally pick their heads up in 2022 to start doing new strategic initiatives that customers really wanted to be served kind of more digitally. And Nest Egg was sitting there saying, 'We have all this, we can do all this, and we can meet your customers where they are.'”
The latest funding round will be used for continued expansion. For now, the focus is on banks and credit unions but when asked if NestEgg could begin pitching to wealth management firms, insurance companies or other types of financial services firms, Miller said “more to come. Right now we are focused on our core audience. But that's something that we're obviously very aware of and a strategic opportunity for us.”
Church and Miller declined to discuss annual revenue or profits.
