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Bono’s VC Firm Is Said to Make Its First Fintech Investment

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.

By Julie Verhage

(Bloomberg) --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 firm co-founded by the U2 lead singer, is making its first known bet on a fintech business by backing Acorns Grow Inc., said people familiar with the matter, who asked not to be identified because the details are private. 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 Inc., BlackRock Inc. and others.

The Irvine, California-based startup has more than $500 million in assets under management, according to a filing with the U.S. 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 LLC.

Analysts have expressed skepticism 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.
 
To contact the reporter on this story: Julie Verhage in New York at [email protected] To contact the editors responsible for this story: Mark Milian at [email protected] Reed Stevenson

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