Edward Jones is Getting into Venture Capital, but Not How You Think
The broker-dealer giant is investing in tech companies with products that can benefit clients and branch teams, but it’s not opening the investments to clients.
As venture capital investment in artificial intelligence startups and other tech grows, nationwide broker-dealer Edward Jones is getting into the act with its own dedicated team.
But Edward Jones Ventures, which had a “soft launch” last year and officially kicked off on Jan. 7, isn’t what you may think — an investment pool for well-heeled individuals willing to take big risks to get big returns from startup companies.
“We’re absolutely not chasing financial returns with this,” says Kit Sundararaman, a principal at the firm who leads the day-to-day operations of Edward Jones Ventures.
Unlike financial firms that are making the venture capital sector available to more investors, Edward Jones Ventures is not opening those investments to its clients.
Instead, the company is putting its own funds into startups developing technology that could benefit its clients and branch offices.
“Our work is not creating a fund for our clients to invest in,” explains Sundararaman, who says Edward Jones Ventures is a “team” within Edward Jones. “It’s things that we are investing in and or partnering on or building together that would benefit our clients, but not from a financial returns perspective.”
Instead, it’ll help Edward Jones better serve its clients and branch offices by enabling them to serve clients more holistically.
Backing Tech that Benefits Edward Jones’ Clients
An Edward Jones Ventures news release listed four tech startups as examples of firms in the company’s portfolio. Each was selected because its product could benefit Edward Jones clients or branch offices, Sundararaman says. The firms are:
Porch Software, which is working with Edward Jones to improve access to insurance products by leveraging an existing digital life platform. The two companies are also working together to build an annuities platform for financial advisors that streamlines processes, connects data and increases product availability. A future goal is to upgrade the platform to include an annuities management function.
Waterlily, a new company that is developing AI-powered software to assist planning for long-term care by projecting future care needs and helping to build personalized care plans.
Vanilla, an estate advisory platform built by financial advisors and estate professionals to help wealth management firms deliver a “holistic, modern estate planning experience to their clients.” This investment was announced in August.
Goalsetter, a spending, saving, wealth-building and financial education platform. This investment was also previously announced.
Sundararaman said that the partnerships go beyond financial services. “As an example, we’re exploring the intersection of health and wealth. How do we help our clients live longer, healthier, better lives through retirement?” she says.
Sundararaman notes that Waterlily, the brainchild of entrepreneur Lily Vittayarukskul, is an example of a health-focused financial platform that will help both Edward Jones’ clients and advisors. “She’s trying to build the tool to help people better understand and predict their long-term care needs,” Sundararaman says. “That type of investment, that type of innovator makes so much sense for us to partner with, given what our clients are facing now and will be facing in the future, for their parents or themselves.”
The Tech will be Available to Others
However, Edward Jones Ventures won’t put a lock on these technologies barring other firms from utilizing them, Sundararaman says. “We’re not trying to create something and keep it to ourselves and only use it for our own benefit,” she says.
“Edward Jones really believes in the philosophy of conscientious capitalism,” Sundararaman explains. “So, if we do good for our clients, if we do good for our branch teams” that benefits the company she says. But she added a commonsense caveat: “Of course, we are not a nonprofit. So certainly (returns on the investments) may bring value to us. But our first focus is, how do we bring value to our clients and our branch teams?”
Asked why Edward Jones is getting involved in venture capital at this time and whether the boom of artificial intelligence companies is behind it, Sundararaman replies, “We try not to be influenced by fads out there. We try to really take a long-term view of everything that we do.” However, as the company formulates its strategic ambitions, it evaluates all the trends in the marketplace, she adds.
The real motivation, Sundararaman says, is to better serve Edward Jones client. “Their needs are diverse, and they’re just becoming more diverse,” she says. “And because we focus on personalized advice, we are really in tune with the diversity of those needs.”
While Sundararaman says Edward Jones Ventures’ involvement with other companies includes investments and other forms of “partnership,” she declines to provide details about the financial and cooperative arrangements.
However, the company plans to continue developing new investments and partnerships through Edward Jones Ventures, she says.
“I anticipate that you will be seeing future press releases from us. This is, this is not a one-and-done press release,” she says of the recent Edward Jones Ventures announcement. “We’re looking forward to future announcements.”
Ed Prince is a writer with Rethinking65. In a four-decade career in journalism, he has served as an editor with many of New Jersey’s leading newspapers, including the Star-Ledger, Asbury Park Press and Home News.
