Beanstox is a mobile app to help build your wealth through savings and investing. The company is also raising money through a crowdfunding campaign on StartEngine. The minimum to invest in Beanstox is only $150.
The chairman and co-founder of the company is Kevin O’Leary. Yes, he is quite famous in the startup and investing world. He is a regular on the popular Shark Tank television show and has written best-selling books like Cold Hard Truth: On Business, Money & Life and The Cold Hard Truth on Men, Women, and Money: 50 Common Money Mistakes and How to Fix Them.
As should be no surprise, he has an impressive social media media presence. Note that his following is over 3 million on LinkedIn, Instagram and YouTube.
The other co-founder of Beanstox is Connor O’Brien, who serves as the CEO. He has more than three decades of experience in the financial services industry, having worked for several Wall Street firms. O’Brien also helped create O’Shares ETFs, which also includes a partnership with O’Leary.
How the App Works
On the Steve Harvey Show, O’Leary said: “We teach young people everything: geography, math, sex education… but we don’t teach them about investing.”
This is true, unfortunately. But with Beanstox, he wants to change this. The app is a robo-advisor that is available on Apple’s (NASDAQ:AAPL) iOS and Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Android Play.
It is based on different types of financial goals. For example, Power Savings is for short-term needs and there is an annual interest rate of up to 2.1%. Then for medium-term objectives, there is Project Builder. This allows for the savings for, say, a down payment on a home or condo. Then there is Wealth Builder, which is for long-range goals like investing wealth for retirement.
Beanstox automates the process of creating model portfolios, which are based on a person’s risk tolerance levels. The investments are focused on exchange-traded funds. These are securities that track a portfolio of stocks and have benefits like diversification, low costs and liquidity.
For all this, Beanstox charges a $5 monthly subscription fee (the break-even point is for 30,000 users). Although, the company has the right to apply a fee of up to 0.25% on any client assets over $25,000.
In terms of the market opportunity — which is certainly key for whether to invest in Beanstox — it is enormous. According to research from the company’s investor profile, the category is expected to reach $16 trillion in assets under management by 2025. Beanstox also believes that 30 million to 40 million people will open robo-advisory accounts during this period.
Should You Invest in Beanstox?
So far, the company has raised over $520,000 in its crowdfunding round. The valuation is set at $15 million.
Through this funding, investors will get Class B Common Stock (this means there are no voting rights). The investment also comes with various perks that are based on the amounts committed. For example, if you invest between $500 and $1,000, you will get six months free on the Beanstox app. Or, if you invest $10,000 or more, you will receive 10% bonus of shares in the company and get access to a virtual retreat with O’Leary.
But of course, even though O’Leary has a great track record, Beanstox is not a slam dunk. The market for robo-advisory services is intensely competitive. Some of the main players like Betterment, Acorns and Wealthfront have strong brands, large user bases and substantial backing from top venture capitalists.
Besides, Beanstox still needs tweaking. For the iOS app, the rating is only 3.6.
Thus, as is the case with any early stage investment, it’s important to understand the risks and also do your own analysis.
Tom Taulli (@ttaulli) is an advisor/board member for startups and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s. As of this writing, he did not hold a position in any of the aforementioned securities.
Investing through equity and real estate crowdfunding or asset tokenization requires a high degree of risk tolerance. Despite what individual companies may promise, there’s always the chance of losing a portion, or the entirety, of your investment. These risks include:
1) Greater chance of failure
2) Risk of fraudulent activity
3) Lack of liquidity
4) Economic downturns
5) Dearth of investor education
Read more: Private Investing Risks