Why We're Leading Cashmere's Seed Financing Round

A Historic Wealth Transfer

If you’re reading this blog post, you’ve almost certainly heard about the ongoing Great Wealth Transfer, an unprecedented shift of assets as the Baby Boomers and Silent Generation pass $80T+ to inheritors. We’ll spare you the deep dive on it here but suffice to say when that much money changes hands the impact is much further reaching than just a few lucky grandchildren’s bank accounts.

For incumbent wealth managers, the transfer poses significant challenges: when assets change hands over 90% also changes institutions, suggesting that much of the AUM (assets under management) that banks, RIAs, and broker-dealers rely on today is in danger of moving over the next several years. That said, the transfer also creates opportunity: all that wealth will soon be up for grabs, and the firms most capable of acquiring new clients at scale stand to gain.    

The benefit for the firms that figure this out will be huge. Put simply, wealth management is a really great business. Advisor AUM fees are recurring, sticky, and predictable and typically grow by at least 7-10% annually (with the market) and potentially much more as clients’ careers progress and they inherit more wealth. For strong advisory firms, client relationships can literally last a lifetime, driving LTVs and net dollar retention that would be the envy of even the hottest software companies today.

But getting to that point is easier said than done. First, firms need to identify, engage, and win those clients. Today more than ever, advisors and clients need a new way to connect, one that can scale to accommodate a massive influx of new prospects and facilitate strong advisor-client relationships that will stand the test of time.

Luckily for all the advisors out there waiting for such a solution, we believe the team at Cashmere is building exactly that.

The Old Paradigm – Missed Connections

Historically, firms have relied on three strategies to grow AUM: M&A, marketing, and prospecting. While M&A is effective, it can be expensive and is rife with execution and operational risk. Marketing helps build brand but falls short in acquiring high net worth clients who tend to require a level of trust that is hard to establish solely through ads.

That leaves prospecting – a labor-intensive process with achingly low conversion rates. Advisors spend hours gathering data from LinkedIn and other sources to build prospect lists, refine profiles, and conduct outreach. But few folks are ready to entrust their entire net worth based on a cold email or LinkedIn message; success often requires warm intros and in-person interaction.

The real challenge is prioritizing time – advisors simply can’t craft a heartfelt email or take every prospect out for a round of golf. For many firms, prospecting also represents a direct trade-off relative to the time they could spend servicing their existing clients, limiting their ability to both grow and deliver a great client experience.

While this is broadly true for any wealth advisor, this is especially frustrating for banks and retail-facing brokerages, who already have relationships (through a retail bank or self-directed offering) with hundreds of thousands of potential wealth clients but lack the infrastructure to surface those names at the right time to the right advisor for targeted outreach.

The upshot is that today’s prospecting paradigm is defined by missed connections. Often, the ideal advisor for a given prospect never knows about them, or reaches out at the wrong time, or gets relegated to the spam folder. Traditionally, this deadweight loss has been viewed as unavoidable but acceptable given the upside when an advisor does manage to get it right. But over the past few years, two factors have changed the willingness of advisors to accept these missed connections as fait accompli.

For one thing, technology has improved: innovations in machine learning and generative AI make it possible to apply intelligence to the prospecting process and to warm cold outreach at scale. But more importantly: in the face of a once-in-a-lifetime mass transfer of wealth, the opportunity cost of missed connections is quickly becoming too high to tolerate.

The New Paradigm – Intelligent Lead Generation

Cashmere was built to solve this problem. Founded by Farbod Nowzad and Eshan Govil, who both have deep experience in applying data science to real-world challenges, Cashmere brings automated, intelligent lead generation to wealth management. The platform consists of three modules:

• Identify: Discover potential prospects, aggregated from dozens of internal and third-party data sources, as they experience significant money-in-motion and life events or meet the characteristics a given advisor wants
• Enrich: Get a holistic understanding of prospects and their fit for a given advisor or firm’s practice from accurate and complete profile information
• Engage: Reach out to prospects through the most effective channel, at the right time, and prioritize the names to spend the most time on

Cashmere combines third party and customers’ internal data sources, layering in life events (moves, divorces, deaths, private jet trips, etc.) to build a comprehensive view of potential prospects.

This precision goes far beyond traditional approaches. Rather than using LinkedIn Sales Navigator to find someone with a C-suite title in the 40-50 age range, Cashmere can serve up a customer that has a C-suite title, is 44, has multiple LLCs registered under their name, more than one trust in place, went to school in Maine, has more than one kid under 18, and so on.

Cashmere can tell advisors if a high-quality prospect owns a vacation home near them or if they contribute to the same charity. It warms the cold outreach when you know a prospect lives next door to an existing client or that their child just graduated high school. Some advisors could do this manually with a lot of sleuthing and time, but Cashmere makes it scalable for even the busiest wealth professionals.

The platform also ranks prospects based on how well they match an advisor’s ideal client profile (ICP), allowing advisors to focus more attention on top-scoring prospects while automating outreach for lower-priority leads. Over time, Cashmere’s models learn and evolve based on CRM and marketing data, refining ICPs, and improving the platform’s accuracy.

Today, Cashmere’s platform is saving customers up to 98% of the time they formerly spent prospecting and surfacing profiles with industry-leading accuracy on over $50B in new assets tracked every month.

Partnering to Support a New Era of Wealth Management

The Canapi team spent the past eighteen months researching the Great Wealth Transfer and concluded early on that every wealth platform will soon need a modern approach to connecting with the next generation. When we first met Eshan and Farbod, we were drawn in by their energy, passion and omnipresent smiles. But as we’ve gotten to know them and watched them build the Cashmere platform, we’ve been inspired by the impact they’ve managed to drive so early in their founding journey.

The Cashmere team has been relentless in their pursuit of building intuitive, high-ROI, beautiful software for wealth platforms of all shapes and sizes. In less than a year, they’ve signed advisor teams ranging from independent RIAs to the largest wealth platforms in the world. They’ve attracted top-tier talent and, with this raise, are now well-positioned to usher in a new standard for advisor-client engagement.

Beyond fintechs and traditional wealth firms, we’re excited about what Cashmere can unlock for Canapi’s ~70 financial institution LPs. With US banks facing margin compression and rampant deposit flight, it’s critical that fee-based income streams like wealth management are defended and enhanced. Here at Canapi, we’re firm believers that banks are the best-positioned platforms to deliver financial prosperity for Americans writ large, and we feel strongly that Cashmere will play a major role in their ability to do so.

The looming specter of the Great Wealth Transfer can be daunting: many institutions are asking themselves how they’ll compete or even survive in a wealth landscape that may soon look quite foreign to today’s. However, the Transfer also brings an unprecedented opportunity for motivated firms to elevate their business models and capture meaningful value. We believe Cashmere has the right product and the perfect team to become essential technology for advisors at all levels, and we’re proud to be leading their $3.6M Seed Financing with participation from other great investors in Benchstrength, Plug and Play, the House Fund, and Courtyard Ventures.