Over the past few decades, celebrities have increasingly taken on roles that go beyond the world of glitz and glam to become the next generation of FinTech investors. And the trend seems to be here to stay.
The FinTech industry might have 99 problems but a celebrity investor ain’t one. With more FinTechs reaching for the stars, the division between Hollywood and financial technology has become increasingly blurred. While in the past it has been common for musicians or actors to grow their wealth through real estate, royalties or restaurants, celebrities are now increasingly taking equity and playing an active role in FinTech startups.
The culture of startup investment and celebrities have become increasingly intertwined in the past decade or so. Not a week goes by when an actor, athlete, musician or influencer doesn’t pop up on a cap table as an angel investor. For instance, after tasting success in the spotlight, stars like Robert Downey Jr., Leonardo DiCaprio, JLo, Justin Timberlake, Will Smith, Jared Leto among others have reached success in the FinTech world and continue to add more startups to their investment portfolio. Other names include four-time Super Bowl champion Joe Montana, NBA all-star Carmelo Anthony and late basketball legend Kobe Bryant.
Stars undoubtedly add glamour to the FinTech space. Recently, rapper A$AP Rocky was revealed as the new celebrity face and shareholder of Klarna in a new advertising campaign for the POS financing house where he took the role of its CEO for a day – another big name to add to the growing list of FinTech influencers including the likes of Shaquille O’Neal and Akon. American-Senegalese singer Akon is already building a city in Senegal named Akon City, powered by his own digital cash: Akoin, while boxer Manny Pacquiao embarked on a career as the founder of payments company PacPay. Will.i.am even acted as an advisor for UK app-only bank Atom, providing the firm with insights on culture, charity and technology.
Apart from investing against equity, many celebrities started their own venture capital funds. Some of the more prominent VC funds also include Ashton Kutcher and Guy Oseary’s A-Grade Investments, rapper Nasir bin Olu Dara Jones’ (Nas) QueensBridge Ventures and Rapper and producer Jay-Z’s Marcy Venture Partners – all of who led a hard knock life to become some of the top celeb-preneurs.
Among 30 celebrities analysed by money.co.uk, Jay-Z topped the Celebrity Investments Index, making him one of the most successful celebrity backers. With an estimated fortune of $1bn, the music star has 11 personal and partner investments with a total investment sum of $983m with tech being his biggest investment area, the report said. Jay-Z indeed knows his beat well and you can’t knock the hustle. He was followed by No Strings Attached actor Kutcher who boasted of 81 personal and partner investments with a total of $3.1bn invested in a slew of startups. The Two and a Half men actor is hardly new to the FinTech ecosystem as he backed rounds supporting businesses like Cedar and brigit through his VC firm Sound Ventures.
Tellingly, the times are a-changin and the industry is rife with new celebrities foraying into the sector as investors, company founders and partners. In terms of investment, celebrities and athletes invested nearly $2.3bn in startups in 2019, an all-time high at the time, according to a report by Tide.co – a figure set to increase by leaps and bounds in the coming years.
Some of the key reasons behind celebs acing it in the FinTech startup world is that they bring their own creative influence and persona which – in many instances – adds to the company ethos. Given that the concept of brand is becoming increasingly important in the financial technology sector and the space continues to spawn more startups across the world, companies can leverage the celeb’s fame. With millions of followers on social media, celebs have the influence to power brands to drive profit as well as purpose. For instance, Drake’s partnership with Aspiration went beyond financial backing. He used Aspiration’s personal and enterprise services to monitor and cut down his own carbon footprint with the aim to make his personal life carbon neutral.
It’s therefore fair to say that the participation of celebrity investors can be a win-win situation where the company benefits from the publicity that the celebrity brings and celebs get a higher return on investment.
However, it’s not that simple when on-screen heroes get involved in companies. Celebs investments resulted in negative interest from regulators. In 2017, the Securities and Exchange Commission (SEC) published a warning that stated investments should not be made “just because someone famous says a product or service is a good investment”. Celebrities might have been lured into participating in a fraudulent scheme or linked to the product without their consent, it said. This warning was published soon after a number of celebrities started to publicise initial coin offerings on their social media accounts.
There have been various figures who were in legal hot water after the regulation was enforced. Paris Hilton famously endorsed – in a deleted tweet – crypto startup LydianCoin, whose founder was later jailed. Steven Seagal was fined $314,000 by the SEC for acting as a brand ambassador for a controversial coin offering held by a company known as “Bitcoiin2Gen”, or B2G. Seagal was also ordered not to promote any securities for three years.
American boxing star Floyd Mayweather and DJ Khaled were fined by the SEC for their apparent failure to disclose that they were paid ambassadors of the Centra Tech ICO. According to the Commission, “Mayweather and Khaled agreed to pay disgorgement, penalties and interest. Mayweather agreed to pay $300,000 in disgorgement, a $300,000 penalty, and $14,775 in prejudgment interest. Khaled agreed to pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest.”
Despite these roadblocks, celebrities continue to bring the limelight onto the companies they choose to put their money into. Let’s have a look at the ten startups which have attracted the who’s who of Hollywood.
Klarna reels in Snoop Dogg, Lady Gaga, Pretty Flacko
The Stockholm-based buy now pay later giant specialises in online financial services such as pre-payment, direct and post-payment options for online storefronts, and department store credit cards for virtual shopping. Founded in 2005 by Sebastian Siemiatkowski, Klarna continues to cement its status as Europe’s most valuable startup and is generating much buzz with investors after reaching a valuation of over $46bn. What sets it apart is that it aims to break the norm in the FinTech space.
Snoop Dogg’s “Get Smoooth” campaign in 2019 was by all accounts highly successful as following that, Klarna became the top trending shopping app on Google Play, added 16 million new consumers and increased new merchant sign-ups by 140% globally compared to the previous year, it said.
A year ago, it launched the Get What You Love campaign with Lady Gaga to “shake up the system and empower people to do what they want, when they want to”. In this vein, Klarna partnered with fashion activist Bea Akerlund who designed a limited edition Knight Finger ring to give the middle finger to the antiquated tradition that says Leap Day is the only day that a woman should propose to her partner. The idea that a woman can only propose to a man one day every four years is, said Lady Gaga, “so completely ridiculous!”
More recently, Fashion Killa – who joined in as an investor – took on the role of CEO for a day where he curated content and experiences in the Klarna smartphone app. A$AP Rocky said he will continue to be “hands-on involved.” “It’s a no-brainer,” he said.
Robinhood’s investor squad
The FINRA regulated broker-dealer, Robinhood has attracted the likes of Leto, Jay-Z, Snoop and Nas as investors since it was founded in 2013.
Founded by Vladimir Tenev and Baiju Bhatt, Robinhood was launched with the formula Facebook made famous: the app was free, easy to use. And Robinhood—named for the legendary medieval outlaw who took from the rich and gave to the poor—had a mission: to “democratize finance for all.” Robinhood offers equity, cryptocurrency and options trading, as well as some bank-like cash management products.
In the past year, Robinhood navigated a slew of controversies including a congressional grilling, trading outages and ensuing customer backlash. It was knee deep in legal trouble from lawmakers and users after it and other brokers restricted the buy-side of trades for volatile stocks, such as GameStop, in late January. GameStop’s stock price soared in January after traders on Reddit pushed one another to keep doubling down on buying shares. Some accused Robinhood of colluding with hedge funds to make sure their losses didn’t snowball. Robinhood said it needed to cap trading due to unprecedented collateral requirements from its clearing house.
Despite that turmoil, Robinhood has been experiencing eye-popping user growth and is preparing for an IPO.
Wealthsimple and its Canadian connection
Toronto-based online brokerage Robinhood rival, Wealthsimple offers cryptocurrency trading, tax services, automated investing, and commission-free stock trading. In May this year, it secures a colossal $750m round which saw superstars like Toronto rapper Drake, Michael J. Fox from Back to the Future, Ryan Reynolds – who is more famously known as Deadpool, professional basketball players Kelly Olynyk and Dwight Powell and NHL player Patrick Marleau take part. The company might have started from the bottom but it’s now worth $4bn.
Wealthsimple specialises in the robo-adviser market, providing automated wealth management services that design an investor’s portfolio based on age, financial goals and risk tolerance. Over the past several years, Wealthsimple has expanded beyond digital portfolio management services, adding a high-interest savings account and a tax-filing service. It now has more than one million clients across all its markets.
There is enough reason that it attracted such big names on its investor list. Wealthsimple’s approach to brand and marketing sets the company apart. It installed a billboard across from cult streetwear brand Supreme, inviting shoppers to think about their purchases as investments.
Furthermore, in an attempt to open a conversation about topics such as financial anxiety and debt, Wealthsimple asked celebrities like Anthony Bourdain and Bobbi Brown to divulge their “Money Diaries.” With this series, which was directed by Oscar-winning filmmaker Errol Morris, the company fearlessly dived into intensely personal topics like debt, privilege and strip club economics. While it can’t make its users time-travel, the firm definitely seems to help its customers plan their finances for the future.
Stars like Justin Timberlake, Will Smith ‘Step’ it up
The teen banking app launched less than a year ago in September 2020 but lured in investors such as TikTok star Charli D’Amelio, Grammy Award-winning pop duo The Chainsmokers, Fresh Prince of Bel-Air actor Will Smith, Jeffrey Katzenberg, Jared Leto, NBA All-Star Stephen Curry, Justin Timberlake, Eli Manning, Kelvin Beachum, Larry Fitzgerald and Andre Iguodala.
TikTok star D’Amelio was not just an investor as she promoted the product and had discussions around financial literacy across her TikTok and Instagram accounts, which have 101.9 million and 34.4 million followers, respectively.
Step specifically targets teen users ages 13 to 18 by offering them an FDIC-insured bank account without fees, and a secured Visa card that helps them establish credit before they turn 18. The app also serves as a peer-to-peer (P2P) platform so they can send money to friends, similar to Apple Pay or Venmo.
The startup hit half a million users in only two months post-launch, adding around 7,000 to 10,000 accounts per day and raised a $100m Series C in April this year. It’s easy to see how Step’s investors can’t stop this feeling.
Eco’s ‘notorious’ investors include P Diddy, Durant
A bevvy of celebrities, athletes and entertainers joined Eco’s $26m round earlier this year. Among them were rapper Diddy, comedian Tiffany Haddish, National Football League players Larry Fitzgerald and Kelvin Beachum Jr., musician Justin “3LAU” Blau, soccer player Keisuke Honda and VC firms of National Basketball Association stars Kevin Durant and Carmelo Anthony.
Unlike Coinbase – which is backed by Nas – Eco calls itself a banking alternative where it rewards users with a cash-back system similar to credit card points. It generates returns by lending users’ deposits out in the stablecoin USDC.
The company actually fits in with some of its celebrities’ apparent investment theses. Durant, Anthony and 3LAU, have chased the upside of non-fungible tokens (NFTs) through bets on Dapper Labs (creator of NBA Top Shot), digital avatar company Genies and other platforms.
What makes it an attractive startup is that it doesn’t market itself as a solely crypto-based firm. Eco aims to be an all-in-one FinTech app while competing with giants like Square and PayPal. With its cashback rewards system, Eco can be competing with shopping apps and extensions like Fold and Lolli. Besides, while offering interest rates on crypto savings, it also competes with the like of BlockFi. Looking at how the company is scaling, indeed can’t nobody hold it down.
Ellevest – the FinTech made for women by women powered by Venus Williams
Founded by ex-Citigroup and Bank of America exec Sallie Krawcheck, Ellevest is a digital investing platform and app that empowers women financially and helps them save for retirement.
Rather than centring on the performance of a particular product or portfolio, the algorithms factor in women’s superior longevity – which is about five years longer than that of men – and the fact that women tend to earn less than men during their careers. Krawcheck is determined to “end the gender gap in investing and personal finance,” and has made it her life’s mission to unleash women’s financial power and get them invested in their biggest goals.
This passion attracted Tennis champion Venus Williams to invest in the firm. Williams is herself invested to empower women to become financially strong. Her lifestyle brand, EleVen by Venus Williams, launched a #PrivilegeTax initiative to bring attention to wage inequality. The new program served as a platform of resources for young women to get inspired and address the issue head-on. Along with Williams, women including Melinda Gates, through her VC firm Pivotal Ventures, Obama staffer Valerie Jarrett also invested in Ellevest
This startup undoubtedly is here to change the game in the robo-advisor sector.
DiCaprio, Orlando Bloom, Tony Stark back socially conscious financial firm Aspiration
When Jay Gatsby himself i.e DiCaprio invests in a FinTech, it undoubtedly raises eyebrows. The one we’re talking about is environmentally conscious firm Aspiration which aims to help people protect the planet by ensuring their deposits are fossil fuel-free and rewarding socially conscious spending.
The branchless Los Angeles–based bank has positioned itself as a “socially conscious, sustainable” alternative to major financial institutions. Customer deposits and investment vehicles like its Redwood Fund are free of fossil-fuel investments, while products and features include “Plant Your Change,” which rounds up debit card purchases to the nearest dollar and uses the change to plant trees.
Alongside DiCaprio, those who have been drawn to Aspiration’s mission include actor and environmentalist Orlando Bloom as well as Iron Man himself – Robert Downey Jr who pumped in the dosh via his Footprint Coalition Ventures. More recently Drake too joined its star-studded list of investors and went further to reduce his carbon footprint.
With superheroes, rappers and top actors on board, the startup is poised to sail successfully even if icebergs come along.
Acorns’ ‘Rock’-ing investor line-up
This banking firm has the support of WWE and acting superstar Dwayne “The Rock” Johnson. Need we say more? It also boasts of getting investment from Dany Garcia, pop singer Jennifer Lopez, former New York Yankees baseball player Alex Rodriguez, Ashton Kutcher and Kevin Durant. The Rock’s strategic partnership also involved several new Acorns programs that encourage families to begin investing early for their children’s future with an added incentive of $7 invested in families Acorns Early account when they sign up.
Founded by Noah Kerner who worked as a DJ for JLo, Acorns allows customers to round up debit card purchases and invest the leftovers. For example, one who spent $1.80 on a coffee would be charged $2, with the extra $0.20 for stocks and bonds.
Having added nearly 600,000 new accounts in the first six weeks of 2021 and reaching a total of more than 9 million users investing about $7.5bn through its app, the startup is set to go public at a $2.2bn valuation via a combination with Nasdaq-listed Spac Pioneer Merger Corp.
The startup is undoubtedly on a fast and furious road to success.
Karat Financial leverages power of social media influencers
More than 30 creators have invested in Karat, including Suicide Squad’s Joker Jared Leto, 3LAU, Nas Daily and Josh Richards — that’s all without the firm any spending on influencer marketing. The list even has YouTube co-founder Steven Chen, Twitter co-founder Biz Stone, former TikTok CEO Kevin Mayer and former Wealthfront CEO Adam Nash, among others.
The reason Karat is garnering so much attention is that it caters to the next generation of influencers. The creator economy is changing the way that people earn a living, whether you’re an Instagram influencer or a freelance graphic designer. But traditional banks haven’t caught up. Karat aims to change that. It analyses creators’ follower counts and engagement rates and hands out cards without fees that tout better credit limits with creator-centric perks.
Karat created a “black card,” which users can use to pay for services and get money and pay it off each month like an American Express Card.
With more than two million creators making over $100,000 per year, it is a large customer base for Karat. It proved its concept with 50% growth from month to month and eight figures in transactions since launch last year.
Dapper Labs’ dapper investors
The startup behind NFT trading platforms NBA Top Shot and CryptoKitties bagged investment from Michael Jordan, Durant, Alex Caruso, Andre Iguodala, Klay Thompson and several other professional NBA, MLB and NFL athletes. Kutcher’s Sound Ventures, Will Smith’s Dreamers VC, rapper 2 Chainz, Stefon Diggs, Shawn Mendes too are a part of its investors.
There is no doubt of escalating interest in nonfungible tokens, or NFTs, which use blockchain technology behind cryptocurrencies to authenticate unique digital assets such as art, music or video of basketball highlights. The market for NFTs ballooned to $338m in 2020, according to a report from NonFungible.com and research firm L’Atelier, from around $41m in 2018. These exploding NFT prices have caught the attention of people from art collectors to the writers at “Saturday Night Live,” as sellers and Twitter executive Jack Dorsey to electronic-music artist 3LAU who have made millions of dollars in recent months.
Since its launch in October 2020, Dapper Labs’ NBA Top Shot attracted over 800,000 users and logged $483m in sales. The platform sees millions of dollars in daily trading volume, a spokesperson revealed, adding that some exceptionally rare cards are selling for $100,000 or more.
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