A West Coast-based business that launched just over a year ago to address the problem of highly concentrated stock positions has added to its expansion war chest with a capital raising.

Cache, an RIA fintech interviewed here back in March, has raised $12.5 million in Series A funding to finance its growth.

The San Francisco-based business, founded in 2022, was formed to deal with what has become an urgent problem – stock concentration risk.

The business will use the capital to expand its goal to be the “go-to platform for managing concentrated stock positions” across all investor types, including advisors, employees and family offices.

The funding round was led by Bill Trenchard at First Round Capital, with participation from solo investors from across technology and finance, Cache said in a statement. 

"This is one of those rare cases where the team, timing, and market opportunity align perfectly," Trenchard said. "Cache is solving a real problem, with clarity and urgency."

Solving a problem
Companies distribute more than $350 billion in stock-based compensation every year. That means that employees who have held that stock through a decade of growth could have one name comprising 70 to 90 per cent of their net worth in their portfolios. 

"When I started Cache, I wasn't trying to build a company that sounded like a financial institution," Srikanth Narayan, founder and CEO of Cache, said. "I just wanted to solve a problem I was facing myself, and that is what to do with a lopsided portfolio full of tech stock that had gone up a lot but came with a huge tax bill if I tried to diversify. That problem wasn't mine alone. It turns out thousands of others were in the same spot."

The firm’s exchange funds allow investors to swap concentrated stock positions for diversified portfolios tracking major indices like the Nasdaq-100 and S&P 500, while deferring capital gains taxes until they choose to sell. The platform requires $100,000 minimums compared with traditional exchange funds' million-dollar requirements, and charges fees of 0.4 to 0.95 per cent versus the 1.5 to 2.25 per cent typical of legacy providers.

Cache’s clients include public company executives, early startup employees, long-term investors, and more than 400 registered wealth management firms. 

The firm has made several hires: Aaron White, former chief growth officer at Adero Partners, leads investor solutions; Paul Smith, who led design at Opendoor and Uber, heads product design. Advisors at Cache include Peter Crawford (chief financial officer at Schwab) and Tim Kochis.

Cache recently launched S&P 500 and S&P 500 Growth benchmarked exchange funds, with new S&P 500 funds beginning investor onboarding starting July 1. The firm, which has amassed more than $625 million in total assets in just over a year since launch, said it is approaching profitability.