NextCapital Raises $30m Series C

NextCapital made its reputation helping investment managers track and manage their clients' portfolios. Now it's got to keep track of a big investment of its own.

The financial software company raised another $30 million, led by Oak HC/FT, a venture fund based in Greenwich, Conn. Two years ago, Chicago-based NextCapital raised $18 million, led by strategic investors such as AllianceBernstein and John Hancock parent Manulife, which offer mutual funds and use the company's software.

NextCapital, founded 21 years ago as Business Logic, started to take off in the past four years as financial services firms have looked to software to allow them to offer more personalized service while keeping costs low. It also reflects the surge in passive investing as more retirement accounts are dominated by exchange-traded mutual funds. NextCapital has raised $54.3 million since 2014.

The company will use the money to add talent in software development, customer operations and building algorithms, says President Dirk Quayle. It tops 90 employees, up from about 40 two years ago. Since then, Quayle says, the company's customer base has grown about four times larger. Other big customers include Transamerica, Russell Investments and State Street Global Advisors.

Companies use NextCapital's software to track thousands of individual client portfolios and to take action on asset-allocation and make individual investment choices, such as exchange-traded funds, based on algorithms. Some customers use the software to handle one task or the other, while others use it for both.

Oak HC/FT has invested in other Chicago-based companies in health care and financial services, including Insureon and Village MD.