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US robo adviser Acorns eyes investments in "electrifying" Southeast Asia industry

By Goh Thean Eu  
October 29, 2019

US robo adviser Acorns is keen to invest in Southeast Asia’s “electrifying” robo-advisory industry, according to the firm’s co-founder Jeffrey Cruttenden, who also wants to invest in his personal capacity.

He says the industry’s trend of growth in the region reminds him of his experience with Acorns, and believes it’s expanding quicker than in the US.

“Things are moving really fast out here… The appetite for innovation here is greater than in the US. I think the regulatory environment here is more open minded,” Mr. Cruttenden says in an interview with Asia Asset Management. “It’s really interesting and electrifying.”

He says he and Acorns have invested in a few financial technology companies in Southeast Asia, though he declines to name them because the information isn’t public yet. He is eyeing more such investments, including in robo advisers.

“The entrepreneurs I have met in this region are really impressive,” he says.

Singapore and Malaysia are leading the pack in Southeast Asia’s robo-advisory industry. The first robo adviser in Singapore made its debut in 2016, and there are now at least ten players in the city state, including independent and bank-backed firms.

In neighbouring Malaysia, the first robo adviser set up shop last year. Two more have since been licensed and another two have secured approval in principal from the country’s securities regulator.

California-based Acorns is seen as one of the most valuable robo advisers in the world after a US$105 million round of funding in January valued it at $860 million, according to figures from private markets data provider Pitchbook. That’s higher than Betterment and Wealthfront, the world’s largest robo advisers by assets, which are valued at $700 million and $500 million, respectively.

Acorns launched its service in 2014 and now has 4.5 million customers, much higher than Betterment and Wealthfront, but only $1.2 billion of total assets under management compared to at least $17 billion for its two rivals.

That’s because Acorns operates on a business model that invests spare change when customers make their regular purchases. Prices are rounded off and the difference transferred to the Acorns investment accounts linked to their credit cards.

Acorns’ investors today include San Francisco-based venture capital firm Comcast Ventures, BlackRock, the world’s largest asset manager, MSD Capital, a private investment firm founded by Dell Technologies’ founder Michael Dell, and singer and actress Jennifer Lopez, according to data from Crunchbase.