American financial technology and financial services company, Acorns Grow Inc., snatched another big name to join its roster of highly renowned stakeholders. Jennifer Lopez and partner Alex Rodriguez are buying stakes in the California-based startup which specializes in micro-investing and Robo-investing.
J.LO is joining other "influential" stakeholders which include Ashton Kutcher and Kevin Durant, The Wall Street reported. Other stakeholders in Acorns include Paypal, BlackRock, and NBCUniversal.
The fintech industry has emerged to be among, if not the most, highly competitive space in the market today. According to one estimate, the worldwide fintech market could be worth $305.7 billion from today until 2023.
Acorns is facing tough competition with other fintech startups that specialize in artificial intelligence, blockchain, cryptography, biometrics, identity management, cybersecurity, and robotic process automation or RPA. According to the Global Fintech Market 2018-2023 report from Research and Markets, AI and chatbots will continue to fuel the fintech market, especially fintech services in the customer service segment. With this, space is expected to expand further at a rate of 21.72 percent within the same period.
Other participants in the rapidly growing space are Robinhood, Ant Financial, and Paytm, which are popular among Millennials and younger investors. Acorns will also be competing with Shanghai Lujiazui International Financial Asset Exchange, Oscar Insurance Corporation, Credit Karma, Kabbage, Atom Bank, Onfido, and Uipath.
The startup, founded by Noah Kerner who worked as a DJ for J.LO at one point, said Acorns is unique in that it allows customers to invest their "spare change." The latter is the leftover amount when the purchases from their debit cards are rounded up.
Acorns debit cards come with no ATM fees, not even overdraft fees, neither minimum balance requirements. As an alternative to these fees, Acorns charges $1-$3 per month until account holders saved $1 million from these fees.
Kerner hopes to grow its account holders to 100 million from its current count of more than 5 million. When Kerner started being CEO for Acorns in 2015, the startup only has 220,000 account holders.
As with Acorns' valuation, the startup is nearing its unicorn stage as it was valued at $860 million in January after its Series E funding. At that time, cash came from Comcast Ventures, Bain Capital Ventures, TPG's Rise Fund, DST and Michael Dell's MSD Capital. By comparison, Robo-advisor Betterment was worth $700 million and Wealthfront was $500 million in the same year.