Bono’s VC firm to make first fintech investment
U2 singer's Rise Fund is to invest in Acorns Grow, which offers digital wealth management services
Financial technology startups are grabbing a greater share of capital from investors. Now Bono is getting in on the action.
The Rise Fund, a venture capital firm cofounded by the U2 lead singer, is making its first known bet on a fintech business by backing Acorns Grow, said people familiar with the matter, who asked not to be identified. Acorns offers a stock-investing app tailored to people with small amounts of disposable income.
A spokeswoman for Acorns declined to comment, and the Rise Fund didn’t immediately respond to a request for comment.
Bono helped start the Rise Fund last year with private equity firm TPG, raising $2 billion to focus on commercial projects capable of having a social or environmental impact. Bono isn’t the first celebrity to make a bet on Acorns. Ashton Kutcher’s Sound Ventures and basketball star Kevin Durant are also backers.
Acorns is part of a growing list of startups offering digital wealth management services. Some 2.7 million people use the app to put spare cash into exchange-traded funds managed by Vanguard Group, BlackRock and others.
The Irvine, California-based startup has more than $500 million in assets under management, according to a filing with the US Securities and Exchange Commission. The average account balance for each client is much lower than other digital wealth startups by design. Acorns clients have less than $500 on average compared with about $43,000 for Betterment.
Analysts have expressed scepticism about whether Acorns can ever become profitable managing such small amounts per customer. Venture capital backers have said Acorns could someday market higher-margin products to a large customer base. The startup has begun taking steps to do that. Late last year, it acquired Portland-based Vault, which lets customers automatically invest part of their paycheck into a retirement fund. Acorns has said it plans to use the technology to offer an individual retirement account.
Updated: January 12, 2018 02:45 PM