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OpenInvest is a San Francisco-based financial technology startup company backed by Y Combinator and Andreessen Horowitz. It participated in the YC S15 cohort of Y Combinator and raised an estimated $13,770,000.
The platform, OpenInvest, was initially launched to assist registered investment advisors (RIA) in tailoring their portfolios to align with their investors' personal values. For example, if investors were not in support or favor of the oil industry, oil-related companies would be screened out. If the investors were overweighted in green energy companies, any additional green energy companies would be screened out. The software is capable of executing these tasks while keeping inventory on the overall market. Investing in line with personal values is referred to as "socially responsible investing."
The OpenInvest Portfolio Diagnosis tool allows investors to quantify and visualize the impact of their investments, which is part of the company's social, economic, and governance (ESG) solution. OpenInvest was designed to meet the investor's needs and understand the translation of their investments goals. For instance, if the investor puts money into green energy, the financial amount can then be translated to the number of trees planted or saved due to that financial investment. This methodology allows investors to quantify and understand their impact on the world.
The Portfolio Diagnosis Tool (PDT) comprises four main features to help RIAs discuss ESG impact with their clients. The tool is offered as a Subscription-as-a-Service (SaaS) package. RIAs can use the PDT quarterly with the client and discuss impact reporting. The quarterly data can also be compared to backdated historical information.
The OpenInvest platform analyzes billions of data points from industry experts to calculate impact. Some included sources are the Carbon Disclosure Project, in-house researching, and public financial reports.
Detailed impact metrics are used to signify specific markers and insights to the investor. Unlike legacy systems that give an overall ESG score, PDT breaks the impact down into several indicators within a specific cause; allowing the investor to decide what is more important to them.
Values-based dynamic investing is the ability to invest in companies that meet expectations of the investor. This allows investors to visualize which companies support, for example, LGBTQ+ rights, gender equality, and ethical supply chains. It also allows investors to divest away from companies that don't support likeminded causes and beliefs like fossil fuels and deforestation.
The product is designed for investors who are looking to be guided through the investment process and is not a self-serve platform akin to Robinhood. The software also allows RIAs to approach investing from a different angle that is more personalized for the investor and client.
