How we shook up the global pensions industry and captured £500bn of pensions assets in 18 months

The UK asset management market is worth £9.5 trillion. That’s four or five times the size of the retail banking or mortgage markets. One of the largest slices of this market is the workplace pension market, which accounts for £3 trillion – or about a third of this very large pie. 

Although the market is massive, the level of communication between client (consumers and consumer representatives) and providers (mainly asset managers) is substandard. Fund management products and investment objectives are described in vague, bullish terms (“invest green!” or “zero carbon!”). And according to the Work and Pensions Committee, many pension funds are “misinforming, mischarging, overcharging and making a fat living off the hard-earned savings of pensioners”. 

The real problem, however, is that pension trustees are making investment decisions without a clear understanding of the costs. According to “worrying evidence” from the Committee, it is “near impossible for investors to figure out how much their investments are costing them because additional costs are hidden and too high”. 

To address this lack of transparency, we built ClearGlass, a platform which helps to provide transparency to pension funds on the hidden fees and costs which impact the value of an individual’s pension pot. 

We knew this solution could have a massive effect on the individual saver’s quality of life. For example, just by reducing the cost of the pension product by 1%, a pensioner could double their investment over 47 years. Our real client, however, wasn’t the consumer, but the consumer’s representative: the pension funds, aka the primary decision-makers behind the £3 trillion pension industry.

After only 18 months, we had secured 400 pension funds, effectively capturing £500bn of pensions assets. We also won some big clients – the kind that usually take about 3 years to win. 

People in our industry always ask us how we managed to win so many clients in such a short amount of time. Here’s our answer: it’s all about identifying your market, becoming an expert in it – and making sure you’re the first one there. 

Surprisingly, in our case, we did come first. The pension market has been so widely misunderstood that no-one has approached this widespread lack of transparency. Until now.

How we raised £2.6m in six months

When we first joined the accelerator, we had no investment, no VC contacts, and no experience fundraising. 

Luckily, Founders Factory helped us shape our pitch and craft our story to be as bold and visionary as it could be, and made a huge number of introductions to VCs – and that’s what got the ball rolling.

Rather than having us go for the big investors immediately, we were advised to pitch to a variety of potential partners first – this allowed us to practice and get better over time. 

For the first three months, we weren’t really getting any traction. No one was willing to take the bet. The rejections all followed a similar pattern: “you’re not a big enough business”, “the market is too small”, “we haven’t seen enough user engagement with your product”, “you’re not B2C”, “you don’t have any metrics'' – in other words, we weren’t telling the story they wanted to hear. But each time we were rejected, we went back and fine-tuned our message. And slowly, the picture started to change.

One organisation that stuck with us early on was Redbus, a fund with two Angels that invest collectively, whom we really got on with. A few other Angels came to us through a range of different models, such as the Founders Factory pitching event, which we attended in our third month. 

By month five, we had traction – and it was clear that we had struck a chord. Suddenly we had three or four term sheets, and our £1.25m goal quickly became too little. Some of the VC firms we were talking to began suggesting that we should raise more than we had originally planned. 

What transpired was that we could unlock an extra £1.4m at a valuation that still made sense for us. LakeStar and Outward VC were particularly interested, the former wanting to invest a full £1.5m. In a way, we found ourselves in our dream scenario: we simply had too many people who wanted to invest.

Choosing our Angel investors

We knew there were certain investors we wanted onboard, and we had to figure out the minimum ticket size they could come onboard with. It ended up being quite complicated – we even had to use a spreadsheet to keep track of everything!

The key, for us, was to set expectations from the beginning, and clarify the roles of our investors. Ultimately, we wanted a small advisory group, not ten people pulling us in ten different directions. 

When we were deciding who to raise from, we asked ourselves a few questions:

1. Do we want to work with them or not? If an investor is coming in at the beginning, as is the case with seed funding, they’re going to be around for a while.

2. Do they understand the space? We found that the ones who did were also the ones who believed in us from day one.

3. What indication do they give to the market? If you bring on senior people, it sends a certain message of credibility – this, of course, was something we were interested in, being a young business in a niche market.

4. Can they introduce us to other potential investors? We had to be strategic about this.

5. Can they help us raise further funds in later rounds? Remember, the first round isn’t your endgame.

In the end, we found a selection of 8-10 Angels that we were interested in. Those that ended up investing included people from JP Morgan (many of whom worked in asset management), and some of our own clients from ClearGlass, mainly asset owners who liked what we were doing. What they all had in common was the fact that they came from the finance industry: they all understood the problems we were tackling – and they wanted to invest. As Rahul Vohra, founder of Superhuman, eloquently puts it: “The easiest way to raise money is to build something that investors use.”

The key, for us, was to bring investors on board that we were really happy with – people who could add value beyond the £2.6m they were investing. Once we had found the right people, we were happy to give away a percentage of our business, because we knew we would get so much more in return.

David Hickson's fundraising guide is filled with useful advice to help you decide which investors to raise from.

Final thoughts

Looking back to the beginning, when we had no network of investors, and no framework for growth, it’s clear how far we’ve come. 

When we joined Founders Factory, we had a list of steps to follow – the most important of which was to RAISE MONEY. In reality, the team at Founders Factory have helped shape every aspect of our business, from product development to hiring, even coaching us on running a high-performance tech company.

There’s no precedent for what we’re doing, no framework for what we’re building next, no Slack or Spotify that we can copy. This lack of precedent creates both a challenge and an opportunity for us: it’s not a problem we can solve by going out and hiring 20 engineers. Instead, we’ll be employing 3D product development processes: we need to talk to our customers, watch how they use our products, look at the data, and ultimately build what they need – before they know they need it.

One thing is for certain: we’re in a much better place than we were 9 months ago.

Ritesh and Chris joined our Accelerator program when they were ready to scale ClearGlass. If you're interested in joining one of our programs, submit an application here.