Financial technology startups are grabbing a greater share of capital from investors. Now Bono is getting in on the action.
The Rise Fund, a private investment fund co-founded by the U2 lead singer, is making its first known bet on a fintech business by backing Acorns Grow, the companies confirmed on Friday.
Acorns offers an investing-and-savings app tailored to people with small amounts of disposable income. Bono helped start the Rise Fund last year with private equity firm TPG, raising $2bn (€1.6bn) to focus on commercial projects capable of having a social or environmental impact.
"I think TPG saw our high impact on top of a great business model and decided to invest," Acorns chief executive officer Noah Kerner said in an interview. "We'll be continuing to grow current products and add others with the new funding."
Bono isn't the first celebrity to make a bet on Acorns. Hollywood actor Ashton Kutcher's Sound Ventures and US basketball star Kevin Durant are also backers.
Acorns is part of a growing list of startups offering digital wealth management services.
Around 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 $500m 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, for instance.
Analysts have expressed scepticism about whether Acorns can become profitable managing such small amounts per customer. Venture capital backers have said Acorns could some day market higher-margin products to a large customer base. The startup has begun taking steps to do that. Late last year, it acquired Vault, based in Portland, Oregon, which lets customers automatically invest part of their salary into a retirement fund. Acorns has said it plans to use the technology to offer an individual retirement account.