Betterment, a New York City-based digital investment advisor, is a viable initial public offering candidate, according to market participants.

The company, which has experienced significant growth over the past few years, could launch a transaction in 2025 or 2026, said two advisers and a venture capitalist, who added though they were not aware of any specific appointments for a potential deal.

An IPO would give the company fresh funds to fuel aggressive growth in the coming years, said one of the advisors. Betterment was rumoured to have been considering an IPO a couple of years ago, but delayed it given market conditions at the time, according to one banker.

The possibility is “becoming more real” and the company is a candidate for an IPO as soon as 2025, he added.

Since the 2020 arrival of CEO Sarah Kirshbaum Levy, who was previously chief operating officer of Viacom Media Networks, the company stepped up its strategy, striking acquisitions to expand its customer base.

In 2021, it acquired Wealthsimple’s US book of business. In April, it purchased Marcus Invest‘s digital investing accounts from Goldman Sachs.

The same banker estimated that Betterment has around a USD 250m-300m revenue run rate, based off internal research. In 2021, it secured USD 60m in a Series F equity round led by Treasury. Kinnevik [STO: KINV-B], Bessemer Venture Partners, Francisco Partners, Menlo Ventures, Anthemis Group, Globespan Capital Partners, Citi Ventures, The Private Shares Fund, Aflac Ventures and ID8 Investments participated in the round.

This followed a previous USD 160m of growth capital comprised of a USD 60m Series F equity round and a USD 100m credit facility. The financing valued the company at nearly USD 1.3bn.

Betterment has executed on its business plan better than peers like Palo, Alto, California-based robo advisor Wealthfront, the VC noted. It may be the only venture-backed company in the sector capable of pursuing an IPO in the next year or two, he said.

Financial technology firms have seen their valuations decline over the last 18 months, however, so Betterment will likely want to test the public markets when sentiment for the sector improves, he added.

The company operates in a highly regulated environment, said one of the advisers, which could hinder its equity story. In 2018, the Financial Industry Regulatory Authority fined it USD 400,000 for violating customer protection rules and not properly maintaining its books and records.

Alongside the option of an IPO, Betterment could attract interest from larger financial sector companies, such as wealth managers and banks, even though an IPO is seen by the market as more likely at this stage, said one advisor. Betterment has forged partnerships with other financial institutions and fintech companies to expand its reach and enhance its offerings. It has also focused on integrating new technologies to improve the user experience and provide more personalised advice.

Betterment was founded in 2008 by Jon Stein and Eli Broverman in New York City. While Stein exited the business, Broverman is still involved as a sponsor and is seen as a strategic figure in the context of the company’s capital markets options due to his familiarity with the business and access to investors.

It launched its platform in May 2010 and became a registered investment advisor with the Securities and Exchange Commission in 2014. Initially, it offered automated investing services with a focus on building diversified portfolios of low-cost exchange-traded funds (ETFs). As it garnered funding from venture capital firms, it introduced features like tax-loss harvesting, retirement planning tools, and socially responsible investing portfolios.

Betterment helps more than 850,000 customers manage over USD 45bn with curated selections of low-cost, expert-built investing portfolios, personalized guidance, and tax-smart tools.

Betterment declined to comment.