FinTech News
Tax-Efficient Diversification Service Cache Raises $12.5 Million
The San Francisco-based FinTech Cache has announced a new round of funding.
About the Funding:
Cache has announced that it’s raised $12.5 million. The Series A was led by Bill Trenchard at First Round Capital, joined by a variety of solo investors. With this latest funding, the startup has now raised a total of $26.8 million, including an $8.5 million seed round last year (also led by First Round).
As Cache notes, this new round comes as the company recently surpassed $625 million in total assets. This milestone was reached just one year after the platform’s launch. The service also reports nearing profitability.
About Cache:
With Cache’s platform, investors can diversify their portfolios without incurring a large tax bill. According to the statup, it offers “modern exchange funds” that track major indices. What’s more, customers can contribute their single-company stock in order to receive their diversified exchange fund shares — and can defer capital gains until they choose to sell.
Currently, the platform requires a minimum of $100,000. Fees for the service range from 0.4% to 0.95%.
What They’re Saying:
Speaking to the idea behind Cache, the company’s founder and CEO Srikanth Narayan said, “When I started Cache, I wasn’t trying to build a company that sounded like a financial institution. I just wanted to solve a problem I was facing myself, and that is what to do with a lopsided portfolio full of tech stock that had gone up a lot, but came with a huge tax bill if I tried to diversify.” Narayan added, “That problem wasn’t mine alone. It turns out thousands of others were in the same spot.”
Meanwhile, First Round Capital partner Bill Trenchard said of the firm’s investment, “This is one of those rare cases where the team, timing, and market opportunity align perfectly. Cache is solving a real problem, with clarity and urgency.”
My Thoughts:
While I’m not nearly rich enough to worry about the issue presented by Cache, the solution they’ve devised does sound interesting. Looking at their site, they suggest that a $1 million portfolio that uses their service to diversify versus selling to do so could be 46% ahead after 10 years ($2.59 million instead of $1.78). Obviously, there are plenty of factors that go into that, but it’s intriguing nonetheless.
With Cache seemingly off to a hot start between their asset milestone, near profitability, and this investment, they’ve definitely joined my FinTech watchlist this week.
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