Fintech startup Alto has raised a $2.8 million seed round, with participation from NerdWallet’s Jake Gibson, Foundation Capital, Sequoia’s Scout Fund, Amplify.LA, and First Check and Green D Funds. The Nashville-based startup offers a “Turbo Tax for your IRA” solution to diversify retirement portfolios with alternative investments.
Alto’s platform helps those interested in alternative investing — think early-stage startups, digital assets, and real estate — use their IRA funds to diversify their portfolio while still taking advantage of the tax benefits.
“Even people who know they can invest in alternatives are often discouraged by the complicated process and arduous paperwork involved,” says CEO Eric Satz.
“Alto’s mission is to bring alternative investments to the mainstream by building an investment platform where individuals can build a diversified portfolio of alternative assets at any scale with their IRA.”
There are more than $9 trillion sitting idly in IRA accounts in the U.S. Meanwhile, only one percent of IRA assets are used for alternative investing. With Alto, the investor opens an Alternative IRA to invest easily in alternative assets, either directly through the platform or through one of their partners, which include AngelList, Wefunder, YieldStreet, Carofin, Silicon Prairie, and GROUNDFLOOR.
The platform coordinates the investment and closing processes for all parties.
“Adding alternative investments to your portfolio can create a better overall risk and return profile via diversification and exposure to new sources of return that do not move in lockstep with the stock market,” says Satz.
This also allows users to curb retirement fund maintenance costs, as many other IRA accounts have hidden fees that grow with account size. Satz says that Alto’s transparent, low-cost fee structure lets investors “know exactly what they are paying for an account and any investments they make.”
The platform can be used by individual investors as well as wealth managers, registered investment advisors, lawyers, and entrepreneurs. Satz compares their alternative IRA to Schwab’s retail brokerage accounts offering.
The startup has raised $3.8 million to date. Prior to founding Alto, Satz co-founded global currency exchange company Currenex, which sold to State Street Corp. for $564 million.
Alto plans to use the seed round to expand their team, integrate additional investment partners, and improve the platform.