Financial services firm invests time, resources into disruptive model

Up until 2017, Margaret Hixon had a thriving investment advisory business in Sarasota for some 25 years, working with a range of clients on retirement planning under the brand CD Advisory Services. The company also had an insurance arm that held about $18 million in premiums. “We were chugging along,” Hixon says.

Then her sons, Phillip and Stuart Dickson, who worked at the firm with Hixon, came to her with a proposal to transform the business. Together with another partner, Justin Bailey, their plan was create a smartphone app that could handle the money management trifecta for clients: investing for the long term, saving for the short term and giving to charities. The Dicksons and Bailey had to convince Hixon to not only shift the direction of the entire business but to also put up about $1.2 million to fund the nascent project.

“I was nervous,” says Hixon, 56. “My initial reaction was, why would we do this? But once they showed me all the data about where the industry was going, it was clear that within 10 years, our business would be totally different. Or we wouldn’t be around at all.”

So Hixon agreed to the proposal. The result? Vimvest. Named partially for the phrase vim and vigor, the company, out of the same Bee Ridge Road offices as CD Advisory Group, has bigger ambitions than even Hixon dreamed about in 2017. With a diverse client base and revenue stream — including end users for the app and registered advisors for the software — Vimvest executives believe the app could eventually be a household name in investing technology.

The company, with 25 employees, has raised $15 million since Hixon’s initial seed capital, with its sights set on raising at least an additional $40 million in the near future. “I want to take on the fintech industry,” says Philip Dickson, 32. “I want people all over the country to use the power of Vimvest.”

The company’s’ timing could be an asset: Financial investing apps are hot and getting hotter with the recent commoditization of digital investing, led by Charles Schwab, E-trade and others. Those giants recently introduced a no-fee platform for online stock trades, while a slew of apps have recently hit the market, in a fintech creative disruption race. Those apps, including Robinhood, Webull, Acorns, Stash and Stockpile, all offer some of the services Vimvest does, Dickson says, but none have all three — investing, saving and giving — in one app.

The Vimvest team’s bold ambitions are backed, so far, with small pockets of proof they could be onto something. Its first full year, 2019, produced about $850,000 in revenue, off fees and revenue sharing-agreements with app partners. And app users, Dickson says, are growing 150% month-over-month. (The full company, including fees from the remaining traditional investment advisory services business, now under the name Vimvest, did $2 million in revenue in 2019.)

Hixon says with up to 13 potential revenue streams for the app when all of its programs are in full use, likely sometime next year, revenue can grow significantly. Those revenue streams includes fees from a host of vendors and partners, plus a small user subscription fee. Vimvest executives project annual revenues could grow to $35 million in 2021, $45 million in 2022 and up to $60 million by 2023.  

Chasing unicorns

More proof Vimvest is onto something: Kevin Harrington, an original shark from the TV show "Shark Tank" and a St. Pete-based entrepreneur, was an early investor and is on the firm’s advisory board. “I believe what they are doing is very timely,” Harrington says. “They are smart people, they have the business chops, and they have a history of success in [the financial services] world.”

In addition to Harrington, who declines to disclose his investment amount, Vimvest has raised a little more than $15 million in three years, according to online venture capital tracking site Crunchbase. The company currently seeks another $10 million in Series A funding, Hixon says, and once that comes through, it has a potential investor lined up for $30 million in another round of financing.

All that has Hixon and the Dicksons thinking unicorn: to become a company valued at more than $1 billion. Not only is that atypical in terms of companies anywhere that get to that level, but also in Florida it’s like a super unicorn. If Vimvest were to get a $1 billion valuation — Hixon predicts it could happen by 2024 — it would join Miami-based pet food company Chewy and Clearwater-based cybersecurity firm KnowBe4 in that rare air. “I really believe this could happen,” Hixon says. “We are storming the industry.”

Split up

The Vimvest app essentially takes the traditional concepts of goal-based saving and investing — putting the money in banks and investment firms — and powers them with easy-to-use smartphone technology. A user, after downloading the app, available on Android and the Apple App Store, starts by depositing funds into the system. Partnering with a bank in Iowa and using advanced cybersecurity tools, the funds are also insured by the federal Securities Investor Protection Investor Corp. “We want to have users feel comfortable enough using this,” Dickson says, “where they will share it with friends and family.”

‘They are smart people, they have the business chops, and they have a history of success.’ Kevin Harrington, Shark Tank, Vimvest

Next, using its patent-pending Vimvest Split, every deposit can be divided into a group of pre-arranged financial goals. That goes from the big ones — a new car, an engagement ring — to smaller ones, such as a quick summer getaway. Other splits can go to investing in stocks and donating to charities. All the goals can be set up with deadlines, and the app even offers a boost, which can move funds into a goal every time you swipe a credit card. Vimvest, Hixon says, will eventually include links to shopping portals, including Amazon, and to travel apps and websites.  

Although it can used by people any age, the app was created with millennials in mind, with a focus on visualizing, curating and simplified automation, according to a Vimvest executive summary. The app is currently free, but Vimvest will soon charge users a $1 monthly subscription service, which would make the revenue model partially a chase for volume. Other revenue streams, the summary adds, could include referral commissions, interest on saved assets and interchange fees.

Vimvest is also targeting a second market: registered independent financial advisers. Dubbed Vimvest for Advisors, the monthly subscription service will start at $500 a month, the prospectus states. With a broad market of more than 200,000 investment advisors, the plan, Dickson says, is to provide that segment of clients an enterprise-level, white-label app they can utilize with their customers.

Vimvest recently hired a financial services executive, Stephen McLeod, to oversee national sales for Vimvest for Advisors. McLeod previously worked with Charles Schwab, where he worked with institutional financial advisory firms. “We definitely believe we can offer advisers something disruptive,” Dickson says.

The business-to-business model, to sell the service to advisors, was a big selling point for Harrington, who has more experience in the business to consumer side. “That part is the icing on the cake,” he says. “That’s very attractive to me.”

‘Big leap’

Like just about any business, the coronavirus pandemic has impacted Vimvest. Employees, for the most part, have been working from home and in remote offices as far as South America and Europe. Also, a prolonged recession can potentially negatively impact the business, in that people have less money to save, spend and invest.

On the flip side, Dickson says the pandemic-forced delay has given software developers more time to refine the product and capabilities. Both Dickson and Hixon are also moving forward with a few early startup-like mistakes behind them, which they hope will serve as important lessons learned.

One lesson: Dickson says to make sure to “always get down all the legal” parts first, particularly in a field as regulated as investing and banking. Doing that along the way cost the company some time and led to false starts.

Another key lesson? Be sure to have enough capital when you hire several people at once, so as to not restrict all the funds to payroll. “We raised like $100,000 and then hired a bunch of people right away,” Dickson says. “That was a big mistake.”

Something Hixon says wasn’t a mistake was her 2017 decision to transform her business, when her sons approached her about Vimvest. Hixon moved to the Sarasota area from her native Tennessee when she was 28. A friend whose husband worked for Raymond James suggested Hixon apply for a job at the financial services firm, telling her Hixon’s extroverted, affable personality would be a great fit there. Hixon didn’t get the job at Raymond James — she instead took a job at Prudential. And after a short time there, she launched her first money management company, CD Central.

Now she excitedly looks to the future with Vimvest — even though she realizes the change, while it holds a lot of potential, has more hurdles to overcome. “This will really test my faith,” Hixon says. “It’s a big leap.”