AnnuityNet Saves For Rainy Day

Hoping to streamline the fragmented and esoteric annuities market, AnnuityNet Inc. recently raised $20 million in a Series B round of venture funding.

The deal was co-led by Conning Capital Partners and GE Equity, each of which pumped $7 million into the Hartford-based issuer. Additional institutional buyers included FBR Financial Fund II and Liberty Financial Companies.

“AnnuityNet is not one of these dotcoms that expects to draw huge traffic to its site,” said Steven Piaker, a partner with Conning. “It’s an infrastructure-enabling play with a proven technology that will help to enable every annuities distribution channel that there is.”

Indeed, while the company does plan to offer consumer access to both annuities information and vehicles, its primary revenue stream will most likely be outsourcing fees derived from financial institutions looking to create private-label affiliate Web sites.

“Annuities aren’t as big a business as mutual funds, and they’re not as well-understood, so they’re a good outsourcing candidate for most of the online banks and brokerages,” said Shane Chalke, founder and chief executive of AnnuityNet.

Proceeds from the recent transaction will be used for technology development and business model refinement.

“We wouldn’t foresee being back in the market this year,” Chalke said. “Our intentions right now are to concentrate on improving our technological capacities over would-be competitors and then deal with financing at that point.”

Existing Series A investor Lincoln National Life Insurance Co. did not participate in the second round deal, although it did retain its existing shares. ]