Ritholtz Wealth’s VC fund stakes SmartRIA in first deal

Ritholtz Wealth Management’s venture capital fund has made its first investment, revealing Tuesday that it has taken a stake in advisor compliance software developer SmartRIA.

The Compound Capital Fund I LP has taken a ‘significant’ minority stake in SmartRIA, said the software company’s chief executive, Mac Bartine. 

‘Ritholtz Wealth is a very, very influential company in our industry,’ Bartine told Citywire. ‘Having them incentivized as shareholders to help us to grow is a tremendous opportunity for us.’

Citywire first reported on the existence of The Compound Capital Fund I LP in March. Michael Batnick, director of research at Ritholtz Wealth Management, is the fund lead. The fund’s brand identity stems from ‘The Compound & Friends,’ a popular weekly podcast Batnick (pictured, right) co-hosts alongside Ritholtz chief executive Josh Brown (pictured, center).

Batnick at the time told Citywire the fund was designed to invest specifically in RIA tech companies. AngelList, a website which helps startups raise money, is the fund’s administrator.

‘Over the years, we have worked closely with a lot of companies in the fintech space and in some cases, we’ve had a very big impact on their outcome, whether it’s with our distribution or being users,’ Batnick said in March. ‘We thought that it made a lot of sense to really lean into this.’

Ritholtz, which is based in New York City, manages roughly $2.7bn in client assets.

Bartine told Citywire that SmartRIA plans to deploy the fresh capital to hire new employees and launch a marketing campaign. The company’s software monitors an advisor’s trading and is designed to alert an RIA’s chief compliance officer if it detects unusual activity.

‘We’ve been kind of flying under the radar for the majority of the company’s existence,’ said Bartine, who has led Knoxville, Tenn.-based SmartRIA since 2015.

Other investors in SmartRIA include RIA middle and back-office services company Dynasty Financial Partners and RIA compliance consultancy MarketCounsel.