On The Right Side of History
With Tobias Auferoth, co-founder of Upvest.
Tobias Auferoth attended the WHU - Otto Beisheim School of Management, a prestigious institution known for fostering an entrepreneurial mindset among its students. This reputation is well-earned, as the school has produced over 15 unicorns in Germany, including FlixBus and Zalando. However, Tobias didn't immediately pursue an entrepreneurial career. After completing his studies, he relocated to Frankfurt, Germany's financial hub, where he embarked on a career in investment banking. He started as an analyst at Goldman Sachs and, two years later, advanced to Associate Director at UBS. Eventually, he moved to London, where a highly promising banking career awaited him.
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But things didn't turn out that way. Tobias soon felt a strong desire for something different. Perhaps the entrepreneurial spirit nurtured during his time at the WHU - Otto Beisheim School of Management was beginning to surface. It was the early 2010s, and technology was becoming increasingly pivotal in financial services — an area that captivated Tobias. While not claiming that banks don't innovate, he explained to me their lack of agility: “Big banks are simply too large to pivot quickly. They're operating on outdated systems that haven't been updated in quite some time. As a fintech, you have the advantage of starting from scratch. You can rethink everything and utilize the latest technology stack.” Tobias no longer envisioned himself on the traditional investment banking trajectory. He wanted to be “on the right side of history” and actively participate in the fintech revolution.
That's exactly what he did.
In 2014, Tobias returned to Germany, this time settling in Berlin. He joined Savedo.de as a Director, a nascent startup nurtured by FinLeap—one of Germany's pioneering fintech incubators. The young company's mission was to create an online financial marketplace that allowed European savers to invest in secure, high-yield term deposits. This marked a significant shift for Tobias, who joined a team of just four people. It was a challenging decision, one that his social circle didn't fully grasp. Leaving a lucrative investment banking role in London for a fledgling startup, what an idea! “I'm not sure my parents were thrilled about that decision. Naturally, you have doubts along the way. But ultimately, it was the right choice. In the equities sector where I worked, there wasn't much of a future for younger professionals,” Tobias explains. Over the next few years, he immersed himself in the tech world, embracing an unwavering focus on customer and product. Then, an opportunity arose. In 2018, Martin Kassing, who was the CPO of FinLeap before, invited him to join an exciting new fintech venture: Upvest.
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Upvest's journey began in the crypto space. The company initially offered fintech-ready APIs that enabled companies to easily store financial assets on the blockchain. Within a year of launching, the platform had processed €50 million in transactions across more than 80 countries. That same year, the company secured a €12 million Series A funding round. And after a few years as a pure software business, Upvest became a licensed company. “At that time, we had the opportunity, under a grandfathering rule, to opt into BaFin regulation. We volunteered to be regulated as a crypto custodian because we were providing APIs to platforms where end users could store their tokens.” For those unfamiliar, custodial wallets are akin to keeping your money in a bank, whereas non-custodial wallets are like storing your money in a personal safe at home.
This was a promising start for Upvest!
However, the market didn't evolve as expected. “The tokenization trend didn't take off as anticipated, and the projected volume never materialized. While we did see some profits from our token-related activities, it became evident that continuing in this direction would pose significant challenges for the company.” Upvest needed to change direction.
In 2021, during discussions with customers, the team discovered a new demand for what they now call an “investment API.” Clients like N26 expressed a preference for securities accounts and traditional securities trading for their end users before implementing wallets. Recognizing this as a larger opportunity, the team expanded its focus from crypto to encompass all asset classes. “This was more of an expansion than a pivot. The underlying logic remained the same—B2B2C. For the first two to three years, we intended to concentrate solely on crypto and had no plans for traditional securities. This shift occurred after conversations with larger clients revealed a demand for regular securities and their willingness to pay.” Fortunately, the founders had the backing of their investors at the time, which facilitated a smooth transition, supported by a new €4 million fundraising round.
From that point on, the company experienced remarkable growth. Upvest repositioned itself as an investment infrastructure provider, enabling fintechs, banks, and wealth managers to offer end users seamless and affordable investment products. This vision led to a $42 million funding round in 2022, led by Bessemer Venture Partners, and a €30 million round in 2023, led by BlackRock. These investments allowed Upvest to enhance its product offerings and rapidly expand its regional presence.
Managing this rapid growth and scaling has been a dynamic challenge for Tobias, who emphasized the importance of recruiting top talent. “I’m fortunate to work with a strong management team and a board of experienced investors who guide us through expansion. Our primary focus has been hiring exceptional talent, ensuring we bring on board people who’ve navigated similar scaling phases before. These senior hires contribute to developing playbooks for crucial areas like compliance, engineering, or product scaling. It helps us avoid common pitfalls.”
These strategies seem to be paying off. In 2024, Upvest processed over 20 million orders on behalf of its clients. With customers like Revolut, Raisin, N26, or bunq, their solution is accessible to over 50 million users across Europe. The company’s revenues grew by an average of 25% per month. Last December, Upvest raised a €100 million Series C round led by Hedosophia, one of the few mega rounds of the year. When I asked Tobias about the impact of this announcement, he said, “It’s massive. The public recognition we receive is extremely important for enterprise clients. They don't want to outsource a core part of their proposition to someone who isn't financially stable. It also has a big impact on hiring because people want to work for a company they perceive as successful.” With this funding, Upvest plans to accelerate its expansion into the UK following their recent FCA approval, and extend its product suite for global financial institutions. Their next goal: empowering 100 million people to invest.
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Reflecting on the most significant lesson he's learned, Tobias emphasized the importance of listening to clients. Building a product that truly meets clients' needs and desires is crucial. Once Upvest achieved product-market fit, everything else began to align—from securing funding to scaling operations. While existing playbooks and literature provide valuable guidance, there's no substitute for a deep understanding of clients.
In its early days, Upvest worked closely with fintechs that became their first clients. This close relationship, along with persistence through lengthy sales cycles, proved to be pivotal. Focusing too heavily on a vision without considering client needs can lead to failure. Being somewhat opportunistic and aligning with market demands is essential for generating early revenue and scaling successfully.
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Thomas