What Happened at FinTech's 'Shark Tank 2'

Ahluwalia provided a compelling pitch for investment in 280CapMarkets, with an $8 million ask for 15% of the company, making it a roughly $54 million valuation. The investors were shocked at this valuation.

They had pointed questions for the CEO about how many advisors actually use individual bonds in client portfolios and how the business could scale quickly in the competitive fixed income ecosystem now dominated by the large Wall Street institutions and custodians.

The audience live poll provided strong support for 280CapMarkets, indicating that roughly 60% of the RIA audience would be interested in a technology platform like 280CapMarkets.

This, plus Ahluwalia's presence and leadership — honed by growing his own RIA and TAMP, AssetMark, to more than $20 billion in his previous career as a wealth management executive — swayed a couple of the investors to engage in negotiations, making 280CapMarkets debut a success.

AdvicePay Last up was the most anticipated pitch of the ScratchWorks session — from famous advisors and industry gurus Michael Kitces and Alan Moore. Known for their wide reach in the industry with multiple business lines, publications, conferences and blogs, Kitces and Moore were pitching their fee-for-service platform, AdvicePay.

According to the duo, AdvicePay is the only billing and payment processing platform created specifically for fee-for-service financial planning. Advisors benefit from efficient invoicing and payment workflows designed exclusively to support their businesses, including up-to-date compliance and data security management.

Users can issue agreements for client e-signatures, accept ACH and credit cards, bill hourly or one-time fees, and establish recurring retainer or subscription billing compliantly — all through AdvicePay's system.

With the recent huge client wins for AdvicePay from large independent broker-dealers, such as Cetera, the platform now has 17,000 advisors — a powerful result for the launch of their recent AdvicePay Enterprise strategy, which Kitces and Moore were pitching to the investors to further accelerate growth.

They asked for $1 million, or 5% of the company, on a $20 million valuation. All of the investors were keen to join in on this deal, as they saw the huge potential for fee-for-service advice and a customized payment platform that will turbocharge that growth.

In his inimitable fashion, Kitces provided a strong argument for why AdvicePay should be valued so highly. The audience also agreed, with the live poll showing that 80% of the top RIAs in the country would be interested in the innovative payments platform.

After a spirited back and forth, the drama on stage kicked up a notch as the ScratchWorks investors offered the duo $2 million for an $8 million valuation. Kitces and Moore countered at $2 million for a $15 million valuation, which was then counter-counter offered by the investors at a $12 million valuation.

Audible gasps from the audience were heard when Kitces and Moore turned down the $2 million offer in a tense, exciting final moment. Right afterwards, the two were swamped by audience members offering to fund AdvicePay at $15 million.

According to Kitces, "The demand from the rest of the room at a $15 million valuation — more than we wanted to raise in the first place — has led us to reconsider whether we may go back to a $20 million valuation.

Meanwhile, ScratchWorks investors are beginning [their] due diligence to try to come to a deal at a final valuation to be determined." As the wealth management industry continues to be transformed by new and emerging technologies, it's clear that fintech accelerators like ScratchWorks are in high demand.

Timothy D. Welsh, CFP, is president, CEO and founder of Nexus Strategy. He consults for firms in the wealth management industry and may occasionally mention them in his writing, which does not represent an endorsement or recommendation. Reach him at [email protected] or on Twitter @NexusStrategy.