Thursday, September 17, 2015

Blooom Inc. In Search of An Angel

Welcome back!  Today's financial literacy article catches us up with the up-and-coming 401k service provider, Blooom Inc.  Now, if you have been following CCM blog for some time, or have taken a look at the Guest Author page, you might recall (or see) that I have had Co-Founders Chris Costello (CEO) and Kevin Conard provide my readers with insightful commentary on the problems individuals face managing their 401ks on their own.  Consider reading: Blooom Co-Founder, Kevin Conard: One of the Good Guys and Which 401k Investor Are You?

I must admit that I am a fan of Blooom.  And it's not just because Chris and Kev are cool dudes.  There's a bullish case for Blooom as a company, and it comes in the form of a growing number of people in this country getting signed-up by their employer into a 401k or similar type of plan.  A while back, I exposed the mishaps of both CalSTRS and NYSTRS, two of the country's largest pension systems for public employees, namely, teachers.

In, How the Devil is on the Loose in State Teacher Systems Nationwide, I criticized the ongoing ineptness of pension fund leaders at the state level, and how pension shortfalls will soon mean alternative pension systems for teachers and other public employees.  In Alaska, new teachers are being placed in Defined Contribution (DC) plans, and only veterans are allowed to stay in their Defined Benefit (DB) plans.  A DC plan is essentially a 401k.  Thus the outcome of more common folk, people like you and me, (remember I'm a teacher) needing Blooom's services, is a foregone conclusion.

With that being said, it is a great time to have a lot of money!  Money to invest with to be exact.  Just yesterday, the Kansas City Business Journal, published some exciting news about Blooom: Blooom surpasses $100M in AUM, looks to hire.  Blooom has reached 100 million in assets under management.  It is looking to grow its staff by at least 10 additional employees, mostly sales professionals and software developers.  Keeping Blooom afloat monetarily requires some tough decisions on the part of Mr. Costello.  He and his two partners are currently the only investors in the company.  That can change.

Mr. Costello has been actively communicating with some venture capital firms, as mentioned in the Bizjournal article, to no avail.  That's how things go sometimes.  Finding a match is not easy to do.  If he were to find the right Angel investor, Mr. Costello could more comfortably push Blooom into the next growth phase.  The article quotes Mr. Costello describing his dream scenario: 

"But if there was the right angel investor out there who was connected in the financial services space to help us strategically, we certainly would want to talk to that person. If we're going to give up equity to take in capital, we really want it to come from people who can offer more than just writing a check. We want someone who has been there and done that, or maybe who has a big Rolodex and can make some key introductions for us."

Are you this angel investor?  Now would be a good time to get in contact with Chris Costello.  The business model is working (proof of concept) as evidenced by the company's ability to quickly reach $100 million in AUM.  The demand for 401k services is going to continue to grow, and Blooom is positioned, as the low-cost, most convenient, provider of these services, to swallow-up some serious market share.  If I had Angel money, I'd be looking to get me a petal or two of that Bloooming flower.  Blooom's a winner, folks.  You betta' recognize!

Thanks for reading.   

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