Smart | empowering employees around the globe to meet their retirement goals

Last year, the Global City interviewed Dan McLaughlin, Director of International at Smart, to hear about how the company has grown to become one of the leading pension tech firms in the UK. We were keen to catch up and hear more about Smart’s growth story over 2022-2023 following a successful Series E fundraising round – and the role that the UK ecosystem played in that journey.

Tell us more about Smart’s growth over the last year and your recent Series E funding round

As a business, we are well past the start-up phase and now in the scale-up phase. We’re now serving more than a million savers in the UK alone, and into the many hundreds of employees around the world beyond that. We have grown to have a presence in the UK, Ireland, the US, the Middle East and Asia. We’ve also got fantastic people working for Smart in Spain, Poland and Croatia.

In terms of some of the financials, from 2021 to 2022 we had a 65 per cent increase in revenue. We now have about £8.5bn under management and expect to hit £10bn in the coming months.

Series E funding rounds are mature fundraisings so at this point you often get the full suite of equity investors like larger private equity firms that are interested in slightly larger ticket prices.

Our Series E was for $95m and was funded by, among others, Aquiline Capital Partners, a US private equity firm based in New York and London and Chrysalis Investments in London. Other existing investors including Fidelity International Strategic Ventures, DWS, Barclays, Natixis followed in on the round as well so that was a great validation from our existing cap table.

I’ve been in many rooms around the globe and the UK fintech sector has got great stature. Being a UK fintech is really important and that ecosystem creates the platform for you to be accepted in key markets around the globe very quickly.

What part has being part of the UK fintech ecosystem played in your growth?

The UK fintech ecosystem is huge. We have got a great business environment in the UK. I’ve been in many rooms around the globe and the UK fintech sector has got great stature. Being a UK fintech is really important and that ecosystem creates the platform for you to be accepted in key markets around the globe very quickly. Consequently, you can use this to gain great access to important stakeholders and clients. If you are in the UK, and you are a fintech, it is a hyper competitive environment, so if you have been around a few years you must be pretty good right?

In terms of technology solutions you can create excellent partners out of the UK ecosystem. There are a whole bunch of fintechs in the UK and globally that you can plug into which can dramatically decrease your time to market and increase value for customers.

The business environment is very conducive too. There is great leadership in fintech in the UK from the government and the various representative bodies, there are excellent tax incentives for early-stage investment which should not be underestimated and we have got a fantastic talent pool in the UK with people across all nationalities.

The fact that we also have an established pensions business in the UK is massive. When you go to these bigger countries having technology capabilities combined with pensions and retirement knowledge is absolutely golden. It really validates who you are and shows that you understand the problems that potential clients are trying to solve. It is really, really important. As we grow in the UK that is only going to get more and more powerful.

There is great leadership in fintech in the UK from government and various representative bodies, there are excellent tax incentives for early-stage investment which should not be underestimated and we have got a fantastic talent pool in the UK with people across all nationalities.

What was the purpose of the funding round?

The purpose of our Series E was to continue to invest in our Keystone technology platform which enables other global financial providers to revolutionise their pension offering and to expand the Smart Pension Master Trust, our UK regulated pension scheme.

By acquiring new capabilities, we continue to grow and power our technology platform and its reach around the world. From a technology perspective we have acquired a couple of businesses in the United States – one pre Series E and one post Series E, and we are now the fifth largest managed retirement account provider in the US. Our technology enables investment portfolios to be personalised at the individual level. It’s about using technology to provide a mass personalised offering.

We are also a consolidator of UK pensions into the Smart Pension Master Trust, our UK pension product. We recently announced that we acquired another large pension fund in the UK called Evolve which has £750m in assets.

To what extent did the global economic challenges impact the fundraising?

When capital markets move into fear mode and you are fundraising in the middle of that it becomes harder for every tech firm. That’s nothing unique. However, despite these conditions, we are delighted that we have had a tremendous validation of our business model by securing our $95m Series E with excellent and strategically aligned investors. That is testament to the size of the retirement market globally - which is $62tn and growing.  With ongoing reforms across the world, which our tech is built to support, the retirement market is a huge global opportunity.