Hot micro-investing app Acorns has raised another $30 million in a funding round led by PayPal, which made a strategic investment along with Rakuten.
PayPal contributed the majority of the investment.
The raise brings Acorns’ total funding to $62 million and aligns it with the biggest name in financial technology.
Acorns’ goal is to capture millennial investors by boiling down the act of investing to small decisions, cofounder Jeff Cruttenden tells Business Insider. The startup uses a portfolio of low-cost ETFs (exchange traded funds) to boil investing down to two questions: “how much” you want to invest and “how much risk” you want to take.
Acorns’ ETFs are wrapped up in a slick mobile package that has helped the startup open over 850,000 investment accounts, and almost 75% of those belong to millennials. Acorns costs $1 per month for accounts less than $5,000, or 0.25% per year on those over that. But if you are a student, or are 18-23 years old, it is free.
This $30 million will help Acorns expand both its reach and its team, but the partnership with PayPal is also significant, Cruttenden says. The companies have been talking for many months about combined initiatives, which will center around opening up avenues of personal finance up, primarily to young investors.
What does that mean? Cruttenden wouldn’t elaborate on the details of the partnership, but incoming Acorns CEO Noah Kerner, a serial entrepreneur who formerly ran WeWork’s strategy and marketing, repeatedly emphasised the idea of millennial investors getting funds from as many sources as possible. While a PayPal integration is the most obvious extension of this, Kerner mentions connecting Acorns to various consumer brands and rewards systems as well.
Acorns would also like to become the mobile financial hub for millennials.
“Investing is a powerful first step,” Cruttenden says. If millennials trust Acorns for investing, they will take advice from the startup about how to optimise other areas of their financial lives. “They will listen to us,” Cruttenden finishes.
Acorns isn’t the only fintech startup jockeying for position at the center of people’s financial lives. $700 million robo-advisor Wealthfront recently launched a major update its CEO Adam Nash calls “Wealthfront 3.0.” The core of the update is a dashboard, a control center for your finances powered by recommendations from Wealthfront’s artificial intelligence engine.
But Acorns thinks its advantage in the crowded ETF startup space is in being the first to effectively leverage mobile, Cruttenden says. And this strategic partnership with PayPal suggests Acorns isn’t resting on its laurels, and trying to provide different areas of value to its customers before competitors catch up.
PayPal, Rakuten Fintech Fund, e.ventures, and Greycroft Partners participated in the current funding round.
We recently did a walkthrough of how to use Acorns. See what it’s like below: