Ethic
Ethic founders from left: Jay Lipman, Doug Scott, Johny Mair
- Ethic, a New York-based sustainable investing start-up, said on Thursday it has raised a $13 million Series A financing round.
- New investors include asset management giant Fidelity Investments and Sound Ventures, Ashton Kutcher's venture capital firm.
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A diverse group of investors, including Ashton Kutcher's venture capital firm and asset management giant Fidelity Investments, is betting on the continued growth of do-good investing by backing sustainable investing fintech Ethic.
On Thursday, New York-based Ethic said it raised $13 million in a Series A financing round from Fidelity, Kutcher's Sound Ventures, and other groups.
Those investors are eyeing a big market: industry group Global Sustainable Investment Alliance counted $30.7 trillion in sustainable investments worldwide last year, a 34% increase in two years. Institutional investors, particularly European groups, have been leading the charge for doing good while making money, both in private and public markets.
More individual investors, particularly women and millennials, are also trying to align their investments with their values. Some are investing on their own through apps like John Hancock-backed COIN, while others look to their financial advisers for guidance. Ethic serves the latter category, creating portfolios that can be customized for individuals and institutions.
In October, the four-year-old firm raised $6.8 million in seed financing, Business Insider reported. Since then, the firm has doubled in size, to 10 people, and hit over $200 million in assets, its trio of cofounders said. Last week, Ethic announced a partnership with Dynasty Financial Partners, a $1.5 billion network of registered investment advisers, for advisers to use its platform to create personalized portfolios.
"Even a year ago, the number of advisers saying they're interested versus even in the last few months is rapidly accelerating," Ethic co-founder Johny Mair said. "Dynasty's a great example. It's not a group you'd think is conventionally interested in sustainability, but they see it as solving a business problem for these advisers."
Nyca Partners, founded by former Visa president Hans Morris, led the Series A round. Other investors in both the seed and Series A rounds included ThirdStream Partners, Urban Innovation Fund, and Kapor Capital. Ethic will use the capital infusion to invest in engineering and client and business relationship managers, co-founder Jay Lipman said.
He added that some of Ethic's venture capital backers had capitalized on the industry shift from active to passive investing, and now see parallels with investors' increasing appetite for sustainable investing. Blake Grossman, for example, sold Barclays Global Investors, including exchange-traded-fund provider iShares, to BlackRock in 2009. He now runs VC firm ThirdStream.
"They saw how it was that you can be part of a major shift that occurs within the investment industry," Lipman said. "That's why it's been so valuable to have so many of them involved, having them see this next shift and wanting us to be a big part of that."
In October, Nyca's Morris told Business Insider that all sides of the asset and wealth management business are talking about their ESG strategy.
"How it evolves is still unclear, but we think the focus and capabilities of Ethic can provide the essential tools for all firms as they sort this out," he said.
Ethic's team works with financial advisers and institutions, including foundations and endowments, to create a suite of equities packaged in separately-managed accounts. Advisers' clients can then invest in a firm-wide product or customize a specific strategy.
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