Vestr, an End-to-End Digital Platform for Investment Certificates

The COVID-19 health crisis continues to claim more victims with now more than 5 million people infected, and over 330,000 deaths, according to the latest data from the Johns Hopkins University of Medicine.

With many countries still remaining on lockdown and most jurisdictions imposing strict restrictions to social and economic life, the COVID-19 pandemic has left small businesses and startups around the world struggling to survive.

According to a Startup Genome study released in April, 74% of startup globally have had to terminate full-time employees since the beginning of the crisis, and 16% saw their revenue drop by more than 80%. Nearly half (41%) said they had three months or less of cash runway left.

In Switzerland, given the growing importance of startups in the local economy, the Federal Council introduced in May a new program aimed at supporting the community. The scheme, based on the existing loan guarantee scheme, supports Swiss startups with scalable and innovative business models, with a loan of up to CHF 1 million.

But besides the economic responses the government has taken to limit the human and economic impact of the COVID-19 pandemic, Swiss startups too have been actively supporting their community by developing new products and services, and providing discounts and free services.

To do our part in supporting the fintech startup community, the Fintech News Network is covering bi-weekly a promising Swiss fintech startup that deserve the spotlight.

For this week, we look at Vestr, a Swiss fintech that makes it easy for asset managers to create and manage actively managed certificates (AMCs).

Vestr: AMCs creation and lifecycle management made easy

Founded by experienced traders and quants, Vestr provides an independent white-labeled business-to-business (B2B) software that facilitates the creation and lifecycle management of AMCs.

AMCs are structured products offering participation in an underlying portfolio of assets. The composition of the underlying asset or index changes over the time at the discretion of the investment manager. These tailor-made certificates might include liquid securities, bonds, funds, shares, derivatives, currencies, etc.

Compared with other investment vehicles, AMCs give asset managers great flexibility for tailoring investment strategies, and enables them to develop, engineer and test their strategies in a very cost-effective manner.

AMCs are set up within a few weeks and offer ongoing cost advantages due to their efficient administration. In addition, the certificates are issued with an ISIN number, making them transferable securities which may be booked at various custodians.

AMCs are a booming class of structured products, but because of their dynamism, they can be difficult for banks to manage and scale. To respond to this, Vestr has developed a platform that allows banks and asset managers to set up and manage their own certificates online in a few clicks.

For asset managers, Vestr allows them to create an AMC from millions of global financial instruments, rebalance their products conveniently and at any time through a digital interface, track their product performance, and generate customized reports.

For issuing banks, the solution provides them with automated lifecycle management, unlimited rebalancings, compliance checks, pre-trade analysis, order execution, and an audit trail.

Founded in 2017 and based in Zug, Vestr is a successful graduate of the 2017 F10 Fintech Accelerator program, and the winner of the 2017 Venture Kick. The startup acquired its first customers in 2018 and signed top-tier private bank Julius Baer as client in 2019.

Vestr’s work with Julius Baer involved developing a platform that allows the bank’s intermediary clients to run AMCs more efficiently. The platform has also enabled Julius Baer to reduce the threshold for setting up AMCs to as little as US$5 million.

Vestr is now setting its sight on the Asian certificates market, which according to co-founder Simon Hasenfratz, has grown by 20% each year to become the biggest certificates market in the world, with over US$250 billion in assets under management.

Vestr counts amongst its backers SIX Group, a top-5 Swiss bank, DI Ventures, and EquityPitcher.