Fintech is the new “Big Thing” and London seems to be the promise land. Nutmeg, a savings and investment management service for professionals, is one of the startups on the way of reaching it. Director and Chief Executive Officer Nick Hungerford, a banker turned entrepreneur, answered our questions.
FinSMEs: Hi Nick. First, can you tell us a little bit more about you? What’s your background?
Nick: Following a business degree at Exeter University, I worked at Barclays in the areas of product, banking and wealth management. Then I went on to become a Divisional Director at Brewin Dolphin before deciding to go to Stanford University in the United States and study for my MBA. It was there that I struck upon the idea of Nutmeg. I was frustrated by the exclusivity and lack of transparency in the investment world — and I knew I wasn’t the only one. So I put together a business plan, secured initial funding and moved back to London to set the business up.
FinSMEs: Let’s speak about Nutmeg. What’s the opportunity you found in the market?
Nick: For decades, people have had to pay for sub-standard and generic investment management through their bank or an IFA. Or they’ve struggled to manage their own investments, unaware of all the options available to them, often paying exorbitant and hidden charges. We’re changing all that. Nutmeg.com is the only discretionary investment management service in the UK that operates an end-to-end online business model. We build and expertly manage investment portfolios for our customers for the same cost of them having to do it all on their own.
Essentially, we give investors a new way to invest – one that is fair, intelligent and accessible. We are proving to the wealth management industry there is a better way – one that is focused on what the customer genuinely wants, embraces technology and is scalable because of the efficiencies an online model can offer. In the same way as Amazon revolutionised book and music sales, and Expedia turned the travel agency business on its head, Nutmeg is transforming the world of investing.
FinSMEs: How does Nutmeg work? Tell me something about the features…
Nick: Basically, you set up an investment goal in our online tool – it could be for a retirement pot, a rainy day fund, your child’s education, or whatever – by telling us how much you want to invest, how much you’re looking to accumulate, over what timeframe and, crucially what level of risk you want to take with your investment. We then take you through a short series of suitability profiling questions to assess your risk appetite and your goals in more detail. We take all this information and construct a professional portfolio for you that we believe matches your objectives. We constantly monitor it and manage it, making adjustments to your investments at least monthly to help keep your portfolio on track and to take advantages of any fresh investment opportunities we identify. And you can log on whenever you want to see where we’ve invested your money and how it’s performing. A typical medium-risk portfolio will hold over 10 funds, totalling over 3,000 individual investments – we invest our customers’ money across many asset classes, countries and industries to spread risk and the opportunity for investment gains.
FinSMEs: Where are you now in terms of growth? Some numbers?
Nick: We’ve seen incredible growth since launch. Just a few years ago I put together a small team of 4 or 5 people to build the site and the product from the ground up, using extensive customer research and testing. We now have 35 staff and that will soon grow to 50. Business in Q1 of 2014 was 350% up on the same period last year and we’ve just completed a significant round of fundraising to help us develop and expand at the pace we want and in the areas our customers want.
FinSMEs: You just raised a huge funding. What can you tell me about the investors? How are you using the funds?
Nick: We raised a total of $32m in that funding period, with shareholders including Schroders, Balderton Capital and Carphone Warehouse founder Sir Charles Dunstone (read here). This gives us a very strong platform from which to push on and deliver more services and products, enhanced site features and continually improve our understanding of customers.
FinSMEs:…future plans?
Nick: We are keen to launch a Nutmeg pension product. That’s high up the list right now. It’s something our customers clearly want. Many of them have expressed that they’d like all their investments under the one Nutmeg umbrella. We are also working on many exciting developments to our mobile presence. Again, we see and hear that customers want this. It fits with their lifestyle better if they can log in to their investment account from mobile or tablet, to see how their portfolio is performing, check Nutmails or to read our regular investment strategy updates.
FinSMEs: Is London the heaven for fintech startups?
Nick: In many ways, it really is. The government has delivered a number of initiatives to help engender innovation in small and medium-sized businesses in the UK, especially in London, and at the same time the financial technology sector has been blossoming. Hand in hand, the two have proved to be very powerful for industry growth and a breeding ground for new, forward-thinking financial businesses. Regarding innovation in financial services, the UK and Europe is still some way behind the US – we’ve often felt quite alone in challenging the traditional and accepted means of investment management – but all that is changing. We’re now seeing more and more young, disruptive businesses enter the sector. It’s all fantastic brilliant news for the consumer as, finally, companies are actively trying to provide high-end, transparent financial management at a price that’s fair and easy to understand.
FinSMEs
18/07/2014