Rob Foregger sold his big co-founder stakes in Personal Capital and NextCapital and now he's putting the money to work -- and trying not to get worked up
The Stowe, Vt. entrepreneur is makng a 12-18 month push for MarketGrader as he upshifts as part of a bigger professed downshift
5 min read- Foregger invests in MarketGrader, betting on RIA demand for smart-beta data.
- MarketGrader targets RIAs with data for ETFs, model portfolios, and direct indexing.
- Foregger shifts focus to investing and advising, seeking work-life balance.
- Smart beta ETFs attracted $126 billion in 2022, highlighting growth potential.
Brooke's Note: Rob Foregger knows his stuff – both in B2C and B2B. He co-founded an RIA that cashed out for $1 billion and he co-founded B2B NextCapital, which he sold to Goldman Sachs. Both were squarely ‘digital.’ Who else can say that in RIA world except maybe Steve Lockshin? This article catches up with Rob as he switches gears – and doesn't – by bringing his expertise and cash to another venture and promising to keep his life “balanced” this time. That's a balancing act for an achiever, hence a touch of cheekiness edited into the article.
Rob Foregger is back in the game, but it's less about rolling up sleeves and more about bankrolling.
The co-founder of Personal Capital and NextCapital – both of which he cashed out of over the last three years – is now the proud owner of a seed stake in MarketGrader, a wonkish, 24-year-old firm that is being reinvented as a 2024 smart-beta data pump.
Foregger's plans for MarketGrader are A-level ambitious.
“MarketGrader may contemplate doing a growth round over the next 12- to 18-months as we look to scale this compelling business,” says Foregger.
RIAs can use MarketGrader data to build ETFs, model portfolios and apply it through direct indexing software, he explains.
“Our investment and support is heavily a bet on the RIA market,” he adds.
Work/life balancing
Foregger, 55, doth protest, er, makes it clear, that he is learning to step back and let others do the heavy, day-to-day lifting.
"My days as a ‘start-up operator’ are over," says Foregger, who joined Reston, Va. seed capital shop Product Lab as a partner, in Jan. 2022.
"I'm focused on a more balanced lifestyle than my past has afforded me … [but] I'll never stop helping great people build great businesses," he continues in an email exchange.
How one 'robo-advisor' got $25 billion on its platform with a Mint.com mindset, 401(k) friendliness, a merger and 16 years of work
ProductLab Chair Jim MacIntyre also invested in MarketGrader in what amounts to a seed round. Like Foregger, he now takes a board seat at the firm.
Untapped growth potential
“Product Lab allows me to actively contribute to companies with great potential … and I get a charge out of sharing my experiences with others going through the same journey,” Foregger says.
It involves "a deeper level of support, direct business development, product development, technology development, and general business scaling support," he adds.
MarketGrader's current niche is selling analytics to giant data consumers, including Dow Jones, SS&C ALPS, VanEck and BMO. See: Beta hunter poaches 27 year-old Dow Jones exec.
Yet, the data cruncher has enormous untapped growth potential, not least because one index tracking its beta equivalent of the S&P 500 has outperformed the benchmark index by 1.4% per year, since 2007, Foregger says.
Story Timeline
Foregger finds unseen “beta” value by scouring data from 41,000 securities. See: IPO dreams die, but Personal Capital gets ‘$1 billion’
Smart beta is a subset of factor investing but with long-only investments and weights by company fundamentals.
Factor portfolios have high exposure to the factor and short equities that have low exposure to the factor. The factor return is the difference between those two.
In 2022, smart beta ETFs attracted $126 billion, or 31% of the $405 billion total of US ETF inflows, according to the CFRA ETF database.
Almost lost in the robo shuffle, Personal Capital, in its 'special category,' is winning as told by an overlooked metric: revenues
Smart beta ETFs also account for 16.7%, or $842 billon of the total $5 trillion in equity ETF assets under management in the US, as of year-end 2022, according to the CFRA.
Foregger's investment in MarketGrader takes his tally of financial technology investments to four, since he quietly left the now Goldman Sachs-owned NextCapital in September 2021.
Since then, he has taken solo stakes in Canadian RIA sales software company, CapIntel, annuity data start-up Micruity and a joint stake through Product Lab in start-up business analysis software company, Ignitio; and now MarketGrader.
Robot victory
A former Fidelity banking executive, Foregger's run in the RIA industry began in 2009 with his co-founding of early digital advice trendsetter, Personal Capital, which he left in 2014, to focus on 401(k) robot, NextCapital, which he co-founded in 2013.
Empower, based in Greenwood Village, Colo., bought Personal Capital in June 2020 in a deal worth up to $1 billion.
Goldman Sachs acquired NextCapital for an undisclosed sum in April 2022. See: After co-founder Rob Foregger departs, NextCapital's CEO sells up.
Foregger holds board seats at Micruity, the Vermont Center for Emerging Technologies, Ignitio, CapIntel, Ursa Major Skincare, and MarketGrader.
Foregger left NextCapital for a six-month “sabbatical” a year before the firm got sold.
Rely on RIABiz? Tell Google.
Naming us a preferred source puts our reporting first in your Top Stories and AI Overviews. Takes one click, and only you see the difference.