Robo-adviser Nutmeg mulls fundraising as losses increase
Robo-adviser Nutmeg said it may need to raise more capital after the firm saw its pre-tax losses increase over the past year. While the firm reported significant growth and a rise in revenues last year, losses widened from £8.9m ($11.8m) to £9.3m. Higher operating costs are believed to be behind the increase. The robo-adviser had around 25,000 customers and £600m in assets under management on its platform at the end of 2016. 
Online investment management service Nutmeg saw losses widen last year as it continued to invest heavily, and said it may need to raise more cash to continue its expansion.

Its accounts with Companies House revealed that pre-tax losses went up from £8.9million to £9.3million in 2016 as operating expenses increased by nearly £1.2million to £11.9million.

However, revenues rose from £1.7million to £2.5million and chief executive Martin Stead, who took the helm in May last year and appointed a new executive team, said the firm has grown ‘significantly’.

Expanding: Nutmeg managed £600m of assets for 25,000 customers at the end of last year

Nutmeg, one of the best known of the many so-called 'robo-adviser' services now available, increased its customer base to 25,000 by the end of last year, according to the accounts, with approximately £600million of assets under its watch.

The website, which offers investors an automated way to invest online at a selected level of risk versus reward, said that it may need more cash on top of the funding it received last year to continue its development.

‘The directors have […] determined that the company may require further cash injections to continue to develop and market its product offering and to build its customer base and its assets under management,’ Nutmeg said in a statement.

‘Under such a scenario, the directors have a reasonable expectation of securing additional funding from the existing shareholders and new investors.’

Online investment management companies like Nutmeg have grown in popularity recently.

Customers can start with as little as £500, plus a £100 per month contribution for portfolios less than £5,000, and pay Nutmeg an annual management fee of between 0.35 per cent and 0.75 per cent, depending on the size of their investment. Additional investment costs which average 0.19 per cent also apply.

Last year the company received large funding from investors, including £12million from Taiwan-based Taipei Fubon Bank and £24million from Hong Kong financial advice firm Convoy.

Stead said that it was using the last round of funding it received in December last year to expand its product offering and ‘rapidly scale’ the business in the UK.

‘Specific focus will be on innovation including new investing options, new tax wrappers and further developing the advice offering,’ he added.