Swell
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
Swell (Swell Investing) was a Santa Monica-based impact investing platform founded in 2017 by David Fanger as an SEC-registered investment adviser incubated by Pacific Life Insurance. It offered 'profit with purpose' portfolios aligned with the UN Sustainable Development Goals - green technology, renewable energy, clean water, disease eradication - open to retail investors with as little as $50. It launched IRAs in 2017 and Swell for Advisors in 2018; Pacific Life dedicated $30 million of capital to it in January 2018. On August 30, 2019, Swell shut down.
02 / Swell FAILURE REASONS
Failure reasons
Swell's unit economics never worked: customer acquisition cost ran as high as $350 per person in the first year (falling to about $150 later), while the average account was just $2,333 - and at a 75-basis-point management fee, Swell netted less than $20 per account on average, far too little to cover costs. The 15,000 clients and $33 million in AUM after two years weren't enough scale, and millennials turned out not to want robo-advice - under 8% of them used a robo-advisor. Pacific Life pulled the plug, saying 'the Swell model is not a long-term fit for our core business strategy.'
03 / EVENT HISTORY
Events in the structured record
- Launch
Pacific Life launched Swell, an impact investing platform with UN SDG-aligned portfolios open to investors with as little as $500; founded by David Fanger.
- Capital dedication
In January 2018 Pacific Life dedicated $30 million of capital to Swell; the company moved to its own holding company, Swell Investing Holding LLC.
- Shutdown
Swell announced it could not achieve the scale needed to sustain operations; it stopped accepting clients and deposits, and on August 30, 2019 closed - 15,000 accounts, $33 million in AUM, 43 employees.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
In July 2019 Swell announced it was not able to achieve the scale needed to sustain operations and would close; client accounts were closed and assets returned.
- 02
On August 30, 2019, Swell shut down: investors could log in until that date; afterwards custodian Folio Investments sold remaining positions and disbursed balances; management fees for August were waived and transfer/closing fees covered.
- 03
Pacific Life, which owned 100% of Swell, kept the remaining assets including the technology; no bankruptcy was involved.