FundGuard Comes Out of Stealth With $4M Seed Round

Predictive financial analytics startup FundGuard emerged from stealth this week with a $4 million round of funding led by Blumberg Capital and LionBird.

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The company, which has offices in New York and Tel Aviv, Israel, describes itself as “a next-generation cloud-based platform to manage investment funds across mutual funds, hedge funds, insurance, and pension assets.” It also claims to be the “world’s first artificial intelligence powered cloud platform to bring investment funds technology out of the ‘digital ice age.’“

FundGuard said it plans to use the money to speed up development of its platform and product. It also will use the financing to hire in both the U.S. and Israel across its R&D and sales departments. The company currently has 11 employees. CEO and co-founder Lior Yogev expects that number to nearly double over the next year.

“The investment funds industry today still runs on legacy technologies built decades ago and unable to support today’s trade volumes and business requirements,” the company maintains in a press release. FundGuard believes its technology will fund managers to lower costs (better “operational efficiency” per itself, attached to lower “total cost of ownership”) so they can better compete with low-fee funds.

Yogev noted that investment funds’ management fees have increasingly been under pressure due to the rise of ETFs and robo-advisors.

“Fidelity’s recent announcement of zero-fee funds shines the spotlight on operational efficiency,” he wrote via email. “We streamline efficiency through the use of AI and new workflow and collaboration tools.”

Chris Gottschalk, principal at San Francisco-based Blumberg Capital, said his firm was impressed with FundGuard’s industry expertise and vision of leveraging AI to bring operating systems for investment funds into the future.

“FundGuard will change how asset managers, custodian banks, and fund administrators get their jobs done by increasing productivity, transparency, and access to data,” he said in written statement.

The company’s work seems to fit under a broader trend in finance towards lower costs. Robinhood wants to kill equity trading fees, robo-advisors like Wealthfront want to supplant human-powered wealth management, and so forth. FundGuard is taking that trend in hand, but focusing its work on helping fund runners keep their own costs down.

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