Future of Investing
With Mylo-Tactex deal, startups buying incumbents doesn’t seem so far-fetched
- On Monday, Canadian personal finance startup Mylo acquired asset manager Tactex, a move that bucks the trend of incumbents buying fintech startups.
- Analysts say Mylo's acquisition depended on a distinct set of circumstances, including a shared mission and a close working relationship between the incumbent and the startup.

Usually, it's the big companies snapping up startups.
From Goldman Sachs' purchase of retirement savings platform Honest Dollar last year to BlackRock's acquisition of FutureAdvisor the year before, that's how it's generally gone in the hotly competitive asset management space. But this week, the opposite happened, with Canadian personal finance startup Mylo acquiring Tactex, a 6-year-old asset management company with CA$ 110 million ($82 million) in assets under management and nine portfolio managers.
Mylo, which will formally launch this summer, will let customers round up purchases to put the savings in investments and save according to predefined goals.
"What we're getting here [with the acquisition] is the ability to create, launch and manage our own investment funds," said Mylo CEO Philip Barrar. "Tactex is the team that manages the accounts -- this is a fully managed investment account and not a robo play."
Mylo said the acquisition is not about technology; it's about getting access to human expertise for Mylo's customers, who will pay CA$1 (80 cents) a month to use the service. It will also cut operational costs. But ultimately what smoothed the buy was the agreement among Tactex and Mylo on the direction of the brand.
"For me, it goes down to a deeper mission of financial inclusion," Barrar said. This vision was reinforced by Tactex CEO Liam Cheung, who said in a statement that Tactex shared Mylo's social mission.
Despite the ease with which the acquisition took place, Barrar acknowledged that it occurred under special circumstances.
"I think you need to have the right kind of infrastructure and foundation, and that's what we had," said Barrar. "I don't think you're going to see fintechs firing incumbents, but when you've gone through the first hurdles, you may see more of that." Barrar said Mylo had already been working closely with Tactex for over a year, during which the common goals became clear.
Analysts agree that Mylo's acquisition depended on enabling factors, including a long-established relationship.
"Traditionally, we've seen startups get acquired -- it's seen as a natural trajectory that will happen in the beginning or down the road," said Laviva Mazhar, a senior analyst with Ferst Capital Partners, a Montreal-based venture capital firm that is an investor in Mylo. "In this case, it was a very natural fit for Mylo and Tactex, as Tactex was working as a supplier for Mylo. They wanted to figure out a way that Mylo would be able to offer those products to anybody."
Mazhar said the acquisition of incumbent asset managers by startups, while possible, will require shared goals and an understanding of the technical requirements and regulatory implications of an acquisition.
Similar moves could occur in the U.S., according to one expert, particularly if the startups have adequate backing. It's also an idea for the banking industry: As Tearsheet previously reported, there were almost 6,000 FDIC-insured banking institutions in the U.S. as of the end of 2016, and 1,541 of them had less than $100 million in assets, including a sliver of failing banks that need saving. With average common equity around $12.5 million for a healthy bank of that size, a well-established startup could pay $25 million and get fully licensed to take deposits.
"It's an obvious trend where some of the well-funded and private-equity backed fintechs could accelerate their growth and capabilities," said Michael Spellacy, senior partner of asset management and leader of global wealth management at PwC.
While such moves could occur, the saturation of the U.S. market with well-resourced industry heavyweights could act as a deterrent.
"The Betterments and Wealthfronts are RIAs [registered investment advisers] that came to market with that package already intact," said Denise Valentine, a senior analyst who specializes in wealth management at Aite Group. "They're up against very large firms with expertise and money. You're coming up face to face with a BlackRock. The dynamics are different."