Blossom, a fintech startup barely two years old, is targeting $50 million in assets under management by the end of this year after growing out of its original mission to shake up the fixed income sector by targeting female Millennial investors.
Co-founded by Gaby Rosenberg in late 2020, Blossom officially began operations in June 2021 with 850 clients and $3.5 million in funds under management (FUM).
Last week, Blossom announced on social media a tenfold increase in funds under management to $35 million (FUM). Since then, Goldberg revealed to Business News Australia that funds have now grown to $36 million from 7,950 customers.
It’s a new growth story for Rosenberg, a conservative investor who founded Blossom with a mission to democratize the fixed income sector for millennial women. Although she has worked in startups her entire career, Blossom Rosenberg’s first foray into finance is a field in which her family is deeply rooted.
“I come from a long line of financial professionals, so there are always interesting discussions and always new ideas,” she says.
Blossom is named in honor of Rosenberg’s grandfather Bertie, who died of pancreatic cancer in 2020.
“He used to bring the whole family together and now Blossom is doing the same,” she says. – Everyone helps.
Rosenberg’s father Lance is the managing director of Gleneagle Securities, which is responsible for Blossom’s fund.
“We’re a majority-women-owned, co-founded and run business, and all we want to do is provide easy-to-understand access to fixed income in a flexible way,” says Rosenberg.
Her vision for Blossom was conceived during the height of the pandemic, at a time when Rosenberg was looking to get on top of her own personal finances but found the market full of barriers to entry.
“I’m inherently risk-averse with my money, and any asset class that offers consistency is super attractive to me,” she says.
“Most of the fixed income funds out there had long terms of three, six and 12 months, and they also had high minimums and high fees.”
Instead of a $20,000 minimum, Blossom has created a simple product that can start with $1 or less that can be topped up or withdrawn like a regular savings account.
“There’s no one out there that’s purely fixed income like us — with a $1 minimum, no account fees, posting earnings every day and quick and easy withdrawals,” says Rosenberg. “We are creating an ideal niche.”
Blossom is currently targeting annual returns of 4.25 per cent, a figure which compares with the RBA’s official cash rate.
“If the cash rate goes up, we will generally respond,” says Rosenberg. “We started in 2021 at 3 percent, then we went to 3.5 percent, then 4 percent and now we are at 4.25 percent.”
Blossom seeks to make an additional 1 percent margin on its investments, from which it derives its profits, with any surplus retained to support the targeted interest rate for investors.
“So far, we’ve followed very well,” says Rosenberg. “We reached our 1 percent margin in 2021 and 2022, and we are on track for 2023 as well.
“We have no government guarantee, so the return to investors is not guaranteed, but we have had a 100 per cent positive month since the start. Every month we have reached the return target that we put into our customer accounts every day.”
Take the middle ground
Rosenberg sees Blossom taking the middle ground in the financial space, which has been flooded by innovative fintech players.
“We are democratizing an asset class. Banks are on the left with steady returns and low risk, and fintechs and other micro-investment platforms are on the right with higher risk but also with amazing technical functionality.
“We’ve taken the best bits from everyone, and we see ourselves operating in this middle ground.”
Rosenberg has teamed up with asset manager Christian Bayliss at Blossom, bringing to the firm his extensive experience in global fixed income strategies with UBS and the Reserve Bank of Australia.
Bayliss is chief investment officer at Fortlake Asset Management, which manages Blossom’s fund – a mix of investment-grade assets such as semi-government, government and corporate bonds, mortgage-backed securities and cash.
“It’s a very diversified portfolio — all fixed income assets and conservative,” says Rosenberg.
“We are very actively managing the investment associated with a savings app that has cool functionality, really important brand values and the purpose of achieving savings goals.”
Blossom is also driven by an ethical investment philosophy that is at the heart of the brand and the investments.
“From an investment perspective, we have strict exclusion and eligibility criteria for what we will and will not invest in – so we have no coal, oil, gas, child slavery, unaffordable weapons and tobacco in our investments,” says Rosenberg.
From a brand perspective, for every new account funded, Blossom plants trees in an Australian bushfire-affected region, while supporting pancreatic cancer research through the Garvan Institute via Blossom’s referral program.
Beyond the Millennial niche
After two years of growing the business, Rosenberg has discovered that it’s not just Millennial women who are hungry for Blossom’s investment offerings.
“We have a very diverse customer base,” she says. “The first is female Millennials who just want to be more savvy with their savings. We also have young mothers who want passive income.”
But Blossom also finds a niche of financially savvy men aged 28 to 35 who want to add to an already diversified portfolio, with interest rate exposure.
“Then we have a very interesting 55- to 65-year-old cohort, who are very financially savvy, high-net-worth men who use us as an alternative to a term deposit for large amounts of cash moving between investments.
“With term deposits, there’s a lock-in, but with Blossom, these types of customers feel like the cash is available, and so we’re seeing quite a lot of interest from these high net worths.”
Rosenberg has big ambitions for Blossom, and envisions the fund growing to $1 billion in assets under management.
“We don’t want to grow this for five years and are looking for a quick exit. We will be comfortable for the next 10 years or so.
“We absolutely aim to reach $50 million by the end of 2023 with 20,000 customers – and then now $100 million, $500 million and $1 billion. We want to be Australia’s fixed income app.”
Blossom is looking to reach these heady heights by building on its app, with plans to roll out fixed income products with “higher returns, different features and flexibility”.
“But looking at the shorter term, we have a lot of new features on our roadmap. We have a lot of new products, like Blossom for kids, joint accounts, Blossom for business and new market expansion as well,” says Rosenberg.
“What we are very excited about is our new Blossom as a service. We have a B2C side of the business, but we also have a B2B side. It basically means that Blossom partners can just disconnect from the Blossom app and connect to their own front end to provide access to our fund.”
Blossom has already lined up three customers for its B2B offering, with one of them now live.
“For us, it’s a winning strategy because we save on acquisition costs, we distribute the products and we focus on our ‘north star value’ which is funds under management – where we make our money,” says Rosenberg.
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