Guideline Raises $7 Million Series A Led By Propel Venture Partners
New funding will further Guideline's mission to fix the retirement industry with its no asset-based fee 401(k) platform
SAN FRANCISCO, July 19, 2016-- Guideline, the startup that's revolutionizing online retirement planning, announced today that it has completed a $7 million Series A round of financing. Propel Venture Partners led the investment round, with participation by existing investors, including NEA and Lerer Hippeau Ventures.
"The employer based retirement plans market is immense, having grown from $4.4 trillion in 2014 to over $6 trillion by 20161, and participants in small business 401(k) plans are paying exorbitant fees on their assets, ranging between 0.68% and 2.66%2," said Ryan Gilbert, partner at Propel Venture Partners. "Guideline is changing the 'high-fee low-growth' game by focusing on 401(k) growth, without collecting fees based on the size of a participant's retirement portfolio. We're extremely excited about the way Guideline is rethinking and rebuilding small business retirement plans."
Guideline is the first and only 100% automatically managed 401(k) offering that does not charge or benefit from asset-based investment fees. Guideline's full stack technology handles all plan administration, payroll automation, payroll integration, recordkeeping, investment management, and compliance. Guideline helps companies provide a successful retirement for their employees through a hassle-free experience.
"Guideline reimagines retirement planning," said Guideline CEO Kevin Busque, co-founder of the successful online and mobile marketplace TaskRabbit. "Our structure, user experience, and pricing model reflect the needs of employers and employees in today's economy. We believe it is time to give employers the sleek, efficient, intuitive 401(k) plan their employees deserve. That's Guideline."
In a recent Medium post, Busque discussed why he started Guideline, spurred by his frustration with the widespread use of high asset under management (AUM) fees for retirement accounts while at TaskRabbit, as well as the financial industry's lack of transparency and inferior technology.
"When you dig into the details and the relationships that outside vendors have with legacy 401(k) providers, it's clear that the industry has lost focus on the goal, which is to give employees the opportunity to save as much as possible for retirement," Busque wrote. "You start to notice all of the hands in the cookie jar: TPAs, fiduciaries, recordkeepers, fund managers, broker/dealers, sponsors, custodians, RIAs, and on and on. It's incredibly confusing, which I imagine is the intention."
The Series A financing will allow Guideline to continue its rapid growth. In 2016, the company added financial and technology professionals to its growing staff and successfully onboarded numerous clients who are looking for easy-to-administer retirement plans. The funds will be used to scale Guideline's proprietary platform and partnerships.
"68% of working-age people (25-64) in the U.S. today do not participate in a 401(k) plan3, often because it is too expensive or too complex for SMB employers to initiate," said Dayna Grayson, partner at NEA. "The incumbent landscape in the 401(k) space lacks technical expertise to deliver a high-quality software—that also offers an ease of use and lower cost—on par with what Guideline has built. Guideline's platform increases the ease, affordability, and transparency of administering retirement plans for the growing SMB workforce."
The key features and benefits of Guideline's retirement services are customizable and designed to scale, with an integrated dashboard for total access to fund data and plan information. Plans are easy to set up and administer, with a simple onboarding process and automatic enrollment. Guideline offers customized investments to meet each participant's goals and professionally managed portfolios, as well as plan testing and 5500 filings.
"The fees charged for 401(k) management services are completely misaligned with customers' retirement potential," Busque wrote in his Medium post. "And therein lies a major opportunity."
About Propel Venture Partners
Propel Venture Partners is an independent venture capital firm based in San Francisco focused on investment opportunities at the intersection of technology and finance. Propel has an exciting relationship with its limited partner BBVA, the global bank leading digital change in financial services. The Propel team believes that the future of financial services will be realized by rethinking and rebuilding as well as disruption, and will partner with technology-driven teams that are challenging too-big-to-fail incumbents in financial services.
Guideline is an all-inclusive 401(k) technology designed for growing businesses. Guideline handles all plan administration, including set-up, participant enrollment and education, recordkeeping, investment management, compliance, and reporting. Guideline is the first full-service 401(k) with straightforward pricing of one flat fee per participant, in contrast to the asset-based fee model predominant in the industry.
1 https://www.ici.org/research/stats/retirement/ret_16_q1, Page 9
2 https://www.ici.org/research/stats/retirement/ret_16_q1, Page 40
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