- New York-based sustainable investing company Ethic announced it raised $13 million in Series A funding
Ethic is a New York-based sustainable investing company that recently announced it raised $13 million in Series A funding. Existing investor Nyca Partners led the round. And they were joined by Fidelity, Sound Ventures (Ashton Kutcher and Guy Oseary), and several others. This round also brought follow-on investments from existing investors including ThirdStream Partners, Urban Innovation Fund, and Kapor Capital.
“The last big shift in wealth management was from active to passive investing. We are now in the midst of the next revolution in wealth management, characterized by a shift to personalized investing, which we believe will disrupt the traditional model of financial product creation,” said Doug Scott — the CEO and co-founder at Ethic. “We’re delighted to welcome new partners who are committed to providing their expertise in order to accelerate the global transition to sustainable investing.”
Sustainable, responsible, and impact investing strategies have grown 38% to roughly $12 trillion from 2016 to 2018, according to the U.S. Forum for Sustainable and Responsible Investing.
This is due to investors increasingly seeking products that enable them to align their portfolios with their unique values. And this is where pooled investment vehicles like mutual funds and exchange-traded funds (ETFs) usually fall short. Ethic handles this need by enabling the creation of personalized investment portfolios at a very large scale.
“That’s what we think is the most striking attribute of Ethic: we believe it is pioneering the future of equities investing,” said John C. (“Hans”) Morris — the managing partner of Nyca Partners. “Every investor can create an individual portfolio customized to the environmental, social and governance factors that matter to them most. The effects can be enormous as Ethic is effectively powering a personalized ETF for everyone. We are very excited about Ethic’s vision and management team.”
Ethic also empowers wealth advisors to engage with their clients on the issues important to them through personalized portfolio construction, transparent impact reporting and integrated education. And by partnering with Ethic, wealth advisors are better positioned to acquire and retain clients as demonstrated by the rapid growth in Ethic’s assets under management.
Since Ethic raised $6.8 million in seed financing in October, Ethic saw its firm double in size to 20 people and it hit over $200 million in assets, according to Business Insider.
“Even a year ago, the number of advisers saying they’re interested versus even in the last few months is rapidly accelerating,” noted Ethic co-founder Johny Mair via Business Insider. “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.”
And Jay Lipman — the co-founder of Ethic — also pointed out that some of the company’s venture capital backers had capitalized on the industry shift from active to passive investing. As a result, they are now seeing parallels with investors’ increasing interest for sustainable investing.