New York-based fintech startup Capitalize aims to make it easier for Americans to keep what they’ve saved in 401ks when they leave a job by simplifying the rollover process. The startup announced on Feb. 11 that it has raised $12.5 million in Series A funding led by Canapi Ventures. Existing investors Bling Capital, Greycroft, RRE and Walkabout also participated.
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Capitalize uses proprietary technology and a team of customer service agents to help users consolidate 401k accounts in an IRA of their choice. Since launching, Sharma says the platform has processed almost $10 million in rollovers.
“We started Capitalize in 2020 with a mission to help Americans save for retirement. We believed then, and still do today, that saving for retirement is too complicated,” Gaurav Sharma, founder and CEO of Capitalize, said in a statement.
Calling the rollover process “antiquated,” Sharma said the already difficult task of deciding how to invest in a 401k is made harder when workers begin changing jobs and amassing dormant 401ks.
“The friction in the 401k rollover process leads millions of Americans to just ‘cash out’ their 401ks prematurely rather than deal with the hassle. It causes millions more to just leave their accounts behind — their savings eroded by fees and sub-optimal investment allocations that grow stale over time,” he said.
Canapi Ventures focuses on investing in growing fintech companies. Jeffrey Reitman, partner at Canapi, reiterated the inefficiencies in the retirement savings process and the relative lack of tech-based solutions so far.
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“Capitalize is solving a critical need for so many Americans, and has already made impressive strides doing so,” he said in a statement. “Many of our bank LPs offer digital IRA products, and Capitalize’s offering will enhance their customer experience while enabling them to grow AUM. We are excited by the market receptivity to their product, and we’re looking forward to helping the team unlock substantial opportunities for growth.”
Sharma praised Canapi’s experience working with fintech startups.
“We’re tackling a big problem, and we relish going after it with talented, like-minded, high-integrity people. That’s why we’re so excited to welcome Canapi Ventures as an investor and to officially announce this $12.5 million Series A round,” Sharma said. “Canapi is a team of investors with deep financial services expertise. They know what it takes to build a lasting financial institution and we’re proud to have them in our corner.”
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Danielle Andrus works as an editor for The Financial Planning Association® (FPA®). Over the past 15 years, she has worked in various capacities, including writing and editing. Andrus has worked for several notable publications and outlets and spent more than seven years as the executive managing editor at ALM Media, publisher of Investment Advisor magazine and ThinkAdvisor.com. Before that, she was online editor for Summit Professional Networks, where she oversaw newsletter development for four magazines, including Benefits Selling, Senior Market Advisor, Boomer Market Advisor, and Bank Advisor.
