Venture capital firms are looking to understand the next generation of investors — or at least moving their money that way. Acorns, the micro-investing app geared toward helping mass affluent clients save for retirement, just secured $105 million in funding and is building out a media partnership with CNBC, according to the firm.
Acorns, which markets itself to younger clients and offers IRAs, is a frontrunner in the business-to-consumer side of retirement planning. It has over 4.5 million accounts and $1.2 billion in AUM, according to the firm. Its previous
The new round of funding puts Acorns at a valuation of $860 million, valued above other automated investment platforms, such as Betterment at $800 million,
“The direct to consumer retail robos ushered in a lot of the early success in the marketplace with the higher valuations,” says Rob Foregger, co-founder of NextCapital, an enterprise digital advice company focused on retirement.
Now it’s time for the retirement-focused players, he says.
In its most recent funding round, Acorns managed to more than double its previous raise. The primary shareholder is now NBCUniversal, which is owned by Comcast, according to Acorns.
NBCUniversal is looking for more than just a financial stake. The media conglomerate’s business media company, CNBC, is partnering up with the micro-investment app, and its chairman, Mark Hoffman, is joining the board. “This partnership with Acorns builds on CNBC’s 30-year commitment to democratizing the financial markets, helping generations invest for their future,” Hoffman said in a statement.
CNBC is hiring a team of 20, which will work out of its Rockefeller Center location, according to the firm.The team will produce personal finance content for Acorns platforms, while the media company will produce features to run across CNBC, NBCUniversal and Comcast platforms. CNBC declined to provide additional comment on the company’s motivation for the partnership.
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“The CNBC team will share their expert knowledge about saving, spending and investing money,” says Acorns CEO Noah Kerner in a
But education isn’t the only motivation. It also has to do with exposure, according to Foregger. Acorns may be trying to solve a problem that stems from high acquisition costs, a reason that robo advisors like Betterment and SigFig have
Acorns focuses on younger individuals, a client base many advisors
“A platform like this one gets [clients] over the preconceived negative stereotypes of being an investor and participating in the markets,” he says.
However, many planners aren’t interested in gaining these smaller clients since they are seen as potentially less lucrative. “These are folks who, at the moment are not going to be calling up their financial planner and dropping $10,000 here and $10,000 here,” Allison says. “But they could turn into those people.”
While Acorns and retirement plan-focused fintechs aren’t a threat to advisors in the next five to 10 years, they could end up being one, Foregger says. “These companies are going to continue to win a new generation of consumers that want to interact with their money in a different way,” he says.