BlackRock’s Fintech Bets Span Lending, Wealthtech, Crypto and More

BlackRock’s Fintech Bets Span Lending, Wealthtech, Crypto and More

by November 16, 2022

BlackRock, one of the world’s largest asset managers, has been actively investing in the fintech industry over the past decade, participating in large rounds of financing across a broad range of segments, from payments and lending, to wealthtech and cryptocurrency, a new analysis by fintech-focused research firm WhiteSight shows.

The report, which delves into the investment firm’s fintech moves, shows that BlackRock has been a prolific fintech investors, dipping its toes into a variety of sectors.

BlackRock's big bets on fintech, Source: WhiteSight, 2022

BlackRock’s big bets on fintech, Source: WhiteSight, 2022

Data from Dealroom corroborate this, indicating that fintech is the second biggest industry BlackRock has invested in, with 46 investments. These investments primarily consist of growth and later stage rounds, and target mainly companies in the US, the UK and India.

According to the WhiteSight analysis, BlackRock’s fintech foray started back in 2011-2015 with debt facilities and participations in lending startups LendingClub and Funding Circle.

This evolved later on into a focus on wealthtech, with investments into robo-advisors, micro-investment and alternative investment platforms, including names like Acorns, iCapital and eFront.

2019, in particular, was a “breakout year” for the fund manager, WhiteSight says, which saw BlackRock taking part in massive funding rounds towards cross-border payment firm Wise (US$292 million) and buy now, pay later (BNPL) firm Klarna (US$460 million) to support their growth.

Following this, in 2020 and 2021, the firm shifted its focus to fintech infrastructure, technology providers and enablers as demand for digital tools and experiences soared on the back of the COVID-19 pandemic. This translated to investments into open banking infrastructure provider Trustly, electronic trading platform Trumid, core banking tech provider 10x Banking, and no-code enterprise application platform Unqork.

Integrating fintech

2021 also saw BlackRock starting more actively teaming up with industry partners, forging a variety of relationships with names like JP Morgan and Saphyre, a fintech and regtech communication platform, to modernize and digitize parts of its processes and functions.

In July 2021, the asset manager unveiled a partnership with Cassini Systems, a provider of pre- and post-trade margin and collateral analytics for derivatives markets, to enhance Aladdin. The deal brought advanced margin analytics capabilities to BlackRock’s end-to-end investment management and operations platform.

The year further saw BlackRock extend its collaboration with iCapital to launch severage private market products covering private equity, private debt, and real assets, across geographies, including a broadening array of environmental, social and governance (ESG)-integrated strategies.

The partnership sought to leverage iCapital’s feeder fund structures and innovative technology platform to digitalize every aspect of the subscription and investor servicing process including capital calls, distributions, transfers and performance reporting for wealth advisors and their clients.

Finally, in mid-2021, BlackRock teamed up with Wise to support its foray into wealth management. This culminated in the launch of Wise Assets, an offering that allows Wise customers to invest in an index tracking fund managed by the investment firm.

Digital assets and crypto bets

This year, WhiteSight notes that BlackRock has diversified its fintech bets even more, investing, for example, in Bolt, an e-commerce payment technology firm, providing a US$30 million term loan facility to Root Insurance, an insurtech company specializing in car insurance, and participating in Wagestream’s US$175 million Series C. Wagestream is a financial wellbeing app and earned wage access platform.

BlackRock also took much bolder steps towards digital assets and crypto. Its most audacious move so far has been its partnership with Coinbase, a collaboration that has allowed Aladdin users access to crypto trading and custody.

At launch, the offering only covered bitcoin but the companies said more functionalities and greater integration are to be expected from the collaboration.

The move came on the back of the launch of several crypto and blockchain-focused investment products throughout the year. These include two blockchain-focused exchange traded funds (ETFs) and a spot bitcoin private trust.

BlackRock is now reportedly working on a new metaverse ETF called the iShares Future Metaverse Tech and Communications ETF, Bloomberg reported in September.

In the crypto space still, BlackRock has taken part in USDC stablecoin issuer Circle’s US$400 million round, crypto platform Anchorage Digital’s US$350 million Series D, and now bankrupted FTX’s US$420 million Series B-1.