by Deborah Balshem
July 9, 2024
DriveWealth, a privately held global financial technology firm, would like to raise its next round of capital via an initial public offering, said CEO Michael Blaugrund.
There is no set timing for a public debut, according to Blaugrund, who said the New York City-based company could be positioned to seriously consider an IPO in 24 months, “give or take.” DriveWealth, which provides a brokerage-as-a-service platform that powers investing and trading experiences, plans to list on the New York Stock Exchange, he added.
Blaugrund, NYSE’s former chief operating officer, was hired as DriveWealth CEO last July, replacing founder Robert Cortright, who transitioned to executive chair.
The company is projecting revenue of more than USD 100m and cash-flow positivity this year, with full-year GAAP profitability expected in 2025, according to Blaugrund. It is debt-free and had a compound annual growth rate of more than 50% the past three years, with continued annual growth of more than 20% forecast, he said. Around 50% of revenue is recurring and the rest is transactional.
DriveWealth was formed in 2012 but growth “really accelerated in 2021 with the retail trading boom around the world” and the completion of a USD 450m Series D. To date, the business has raised more than USD 550m, Blaugrund said.
Investors include Accel, Insight Partners, Point72 Ventures, Greyhound Capital, Fidelity International Strategic Ventures, Citi Ventures, SoftBank Vision Fund, SBI Group and Route 66 Ventures.
DriveWealth has no direct public comparable, according to Blaugrund. He pointed instead to adjacent electronic wealth management platforms such as Interactive Brokers [NASDAQ:IBKR] and Charles Schwab [NYSE:SCHW], and pure-play fintechs such as Block [NYSE:SQ].
DriveWealth’s platform powers a variety of experiences, from traditional investment workflows to more innovative techniques such as rounding up purchases into fractional share ownership and 24-hour trading. It focuses primarily on US securities but is growing in options and fixed-income trading, Blaugrund noted.
The company caters to banks, broker-dealers, asset managers, digital wallets and consumer brands. It has approximately 100 customers, including Block’s Cash App, BTG Pactual, Revolut, Toss Securities and Stake. Business is evenly distributed across North America, Europe, Asia and Latin America, Blaugrund said.
DriveWealth has 350 employees, half of which are engineers and half of which are remote, the CEO noted. It has small teams in Singapore, Lithuania and Brazil. The company acquired Cuttone & Company in 2021 and Crypto-Systems in 2022, both tuck-in deals,
according to Blaugrund. It remains opportunistic on buys that expand its product portfolio, with international securities as the “area of greatest interest.” DriveWealth is open to small and large deals globally, the CEO added, with Singapore and the European Union among attractive regions.
Other players in the space, according to Blaugrund, include industry incumbents such as BNY Mellon’s [NYSE:BK] Pershing and newer entrants such as Apex Clearing, a division of Apex Fintech Solutions.
DriveWealth’s APIs power the full range of brokerage services for its partners, but the firm further differentiates itself from peers by leveraging its own principal trading capabilities to provide additional liquidity to customers before sending orders to exchanges or other market centers, Blaugrund explained.
Cooley and Grant Thornton provide legal and accounting services, respectively, to DriveWealth.
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