Two startups, Retirable and Capitalize, announced seed funds of $4.7 million and $2 million, respectively, on Tuesday to go after the $17 trillion retirement savings market. Each has a different approach to helping Americans manage their retirement accounts.
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Vestigo Ventures led the $4.7 million round for New York-based Retirable, with participation from Diagram Ventures, Primetime Partners and angel investors. The company, founded last October, is developing a fee-based retirement process for older Americans that centers around personalized, digital plans from Certified Financial Planners, Tyler End, co-founder and CEO of Retirable, told Crunchbase News.
“There are 50 million Americans between the ages of 50 and 60, many of whom have never seen a financial plan, and no one is focused on this area without selling a product,” he said. “Everyone deserves the ability to save for retirement, regardless of their age or net worth, and we can give it to them.”
Retirable plans to use the new funding to provide advisory services, hire more CFPs, continue product development, and invest in future partnerships. The company’s beta phase included helping 65,000 pre-retirees and creating 8,000 financial plans, End said.
Customers can set up their portfolios for free, but if they want to speak with a CFP, they pay $99 per year. If customers want further services, such as Medicare plans, the CFP will recommend trusted partners.
Abby Miller Levy, managing partner and co-founder of Primetime Partners, said in an interview that Retirable’s approach is immediately beneficial to older adults.
“There is something about being able to build skills so that it reduces financial stress, especially when you are an older adult seeing your bank account going down each month,” Levy said. “Dealing with finances is not going to be fun, but Retirable has made it more accessible, relatable and actionable.”
Meanwhile, Capitalize, also based in New York, touts that it is developing the first independent platform that enables people to locate and transfer their legacy 401(k) retirement assets. The startup, which launched in late 2019, closed on a $2 million seed round led by Bling Capital. Additional investors included Greycroft, RRE Ventures and Walkabout Ventures.
“One of the biggest problems is accounts that are tied to employers,” Gaurav Sharma, co-founder and CEO of Capitalize, told Crunchbase News. “They may offer a 401(k), but when you change jobs, you have to figure out what to do with the money, and many people tend to make bad decisions.”
Many times, people do one of two things: They leave their 401(k)s with former employers, often forgetting about them, or they cash them out and take the penalty prematurely. Of the 15 million people changing jobs per year, just 5 million roll over their 401(k)s into an individual retirement account, Sharma said.
Instead, when Capitalize customers change jobs, they tell the platform where they work now, link it within their profile, and the startup will advise on the best course of action and transfer.
Capitalize will use the new funding for product development to add new features, grow its team within product engineering and support, and acquire new customers. Sharma intends to add four employees by the end of the year to make a workforce of 10.
“The 401(k) is a bit of a burden for the employer, and this is where we want to go in the long term,” Sharma said. “One of the reasons the launch is timely is that we managed to help people who were laid off during the pandemic to make the most of their savings.”
Illustration: Dom Guzman