Acorns IPO: What you need to know about a 2021 public offering

Founded in 2012, the Irvine, California based Acorns Grow, LLC has emerged as a leading micro-investing and robo-advisor platform. From its 2014 launch, the platform has grown to ovr 8 million users, with $257 million in funding and an announced May 2021 SPAC-merger with Pioneer Merger Corp lead IPO worth $2.2 billion. 

Related: What is a SPAC?

The founders of Acorns, Walter and Jeffery Cruttenden, originally had the goal to simplify investing to encourage average Americans to save.  Their innovative smartphone app works by investing small incremental contributions, taken when purchases made with linked debit or credit cards are rounded up to the nearest dollar, into low-cost, diversified portfolios of exchange-traded funds, or ETFs, chosen by Acorns.


  • Founded by Walter and Jeffrey Cruttenden in 2012; mobile app launched 2014; Current CEO Noah Kerner, formerly of WeWork.
  • Tapped Nobel Peace Prize winning economist Harry Markowitz to select its diversified portfolio of index funds.  
  • Launched Money Lab in 2018 and lead by Shlomo Benartzi, professor and co-founder of Behavioral Decision-Making group at UCLA’s Anderson School of Management
  • Initially focused on changing the savings and investing behaviors of  “disenfranchised” young investors under 35.
  • Eleven rounds of fundraising with major investors–NBCUniversial, and PayPal–bringing the total raised to a reported $257 million.
  • Currently offers $1 per month for account moving spare change into investment portfolios; $2 to add IRA and $3 for a checking and debit card.
  • Censured and fined in 2017 for failure to maintain proper customer records and fielded reported subscriber complaints that fees are too excessive for the amount of money made from investments.
  • Acorns switched from fee based account balance to primarily tiered subscription model to address complaints of calculated fees decreasing purported 9% returns.
  • 2019 partnership with CNBC to make more information on investing and finance available to a broader audience through Acorns’ Grow website.
  • October 2020 partnership with online job market ZipRecruiter allows users to browse and apply for jobs through Acorns app.
  • Added Acorns Spend (checking and savings accounts), Acorns Early
    (custodial accounts for children)  and Acorns Later (retirement accounts) to its line up.
  • Acorns went through a SPAC-merger in May 2021with Pioneer and subsequently went public with their $2.2 billion IPO in the same month.  At their last round of funding in December 2019, the private company did not share their valuation. 

Acorns at a glance

Acorns, legal name is Acorns Grow LLC,  was founded in 2012 by Walter and Jeffery Cruttenden because they wanted to streamline the investment process for the average American consumer. Jeffrey Cruttenden, then a mathematics major at Lewis and Clark University,  conceived of Acorns after noticing that even among his smart and savvy friends, none had investment accounts. The father and son team realized that the traditional, commission-based brokerage firms were not serving a large swath of the population who find it difficult to get enough money together to get started, or for whom commissions based brokerage firms make it hard for them to invest small amounts. Also, according to Walter Cruttenden, the most significant barrier potential small investors face is that they may be overwhelmed by the choices, e.g. stock funds, mutual funds and ETFs.  

Therefore, the father and son team wanted to teach financial literacy, streamline the process to save and invest, and more ambitiously – close the wealth gap. Acorns claims only 1% of Americans that need financial help have access to it and that over 70% don’t have over $1,000 in savings. At first, Walter and Jeffery wanted to develop and sell their micro-investing platform to a traditional brokerage firm as “the starter account, the farm school, the incubator” that would make users become more familiar with investing and participating more widely in the stock market. With initial funding from their family investment firm, Cruttenden Partners, and two years working with regulators, Walter and Jeffery chose to retain the broker-dealer platform. In 2014, the smartphone app was launched and in eight months, Acorns was on its third round of financing. Walter Cruttenden, Acorns co-founder, served as its first CEO and Jeffery Cruttenden served as COO.  Leadership and transitions have been smooth post SPAC merger and Acorns currently employs 260 people. Currently Noah Kerner serves as CEO, and will continue after the merger and IPO is complete. 

With its target demographic of tech-savvy clients who are uninformed of traditional investing, Acorns experienced incredible growth and attracted diverse investors in its early fundraising rounds.  By 2019, NBCUniversal, and Comcast, led a funding round and raised $105 million. Acorns also attracted celebrity investors such as Dwayne the Rock, Jennifer Lopez, and Kevin Durant.

The brand’s philosophy and guiding principles are centered around the user experience: 

  • Acorns innovates by streamlining the process for passive investment 
  • Users can set up an account and start investing in minutes
  • Sign up is very similar to applying for a credit card online
  • Acorns offers a choice of ETFs, conservative to aggressive 

Acorns has had continued growth throughout the lifetime of the company. The global COVID-19 pandemic has also increased interest as users jumped from 4.2 million to 6.8 million. With the lockdown and economic downturn, more users turned to savings and having a financial backup plan. Acorns’ expansion into checking and savings accounts, called Acorn Spend, led to the acquisition of AI tool, Harvest in 2021. This acquisition will help Acorns deal with any potential growing pains in this area such as refunds and bank fees.  The co-founders’ goal of nurturing an underserved demographic into potential clients for traditional firms seems to have borne fruit with BlackRock investing its own capital as other firms are taking interest, and new micro-investing companies and platforms are going live.

Acorns fundraising to date

Acorns has reportedly raised a total of $207 million over eleven rounds of funding according to Crunchbase. 

Here is a summary of key funding: 

  • Pre Seed Round: $300 thousand raised Cruttenden Partners; June 2012
  • Series A:  $2.5 million raised by Steelpoint Capital Partners; October 2013
  • Series B:  $6.2 million from Jacobs Asset Management and 1 other; March 2014
  • Series C: $23 million from Greycroft, Headline and 6 others; February 2015
  • Series D: $70 million from Paypal Ventures and 14 others; April 2016; June 2017
  • Venture Round: undisclosed amount from The Rise Fund; January 2018
  • Seed E: $105 million from Comcast Ventures, NBCUniversal and 7 others; January 2019
  • Venture Round: undisclosed amount from 5 investors; August 2019; December 2019
  • Secondary Market: undisclosed amount from 1 investor; March 2021

Acorns acquisitions

Acorns acquired these 3 platforms to help expand its own offerings and platform:

  • 2017, Acorns, for an undisclosed amount, acquired Vault retirement savings company to expand their retirement offerings, Acorns Later
  • 2021 Acorns, for undisclosed amount, acquired Harvest Platform to automate refunds and negotiate lower bank fees to support Acorns Spend, checking and savings accounts offering
  • 2021 Acorns, for an undisclosed amount, acquired Pilar Life a digital platform to enable Acorn to offer data management for customers

Path to the Acorns IPO

In 2019, Acorns boasted $1 billion invested.  Revenue, from roughly 80% subscription fees and 20% transaction fees and brand partnerships, rose 61% in 2020. To continue this “momentum,” CEO Kerner said the time was “right to go public to accelerate growth and get the tools of responsible wealth-making in everyone’s hands as fast as possible, when they need it most.” Agreeing to list by merging with Pioneer, a Special Purpose Acquisition Company (SPAC), the funds raised will be used to further grow Acorns. The transaction will value the combined company at $2.2 billion and leave the Acorns with over $450 million in cash upon closing. The existing owners of Acorns, including its management, will hold a majority stake in the business upon completion.

The chief executive of Acorns, Noah Kerner, is donating 10% of his personal shares in the business to fund a new programme that will dish out stock in the business for free to eligible customers. One of the sponsors is also contributing 10% of their stake towards the plan. Jonathan Christodoro, Chairman of Pioneer, stated; “Acorns value proposition is built around inclusive, long-term financial wellness. With integrity at its core, the brand has an incredibly loyal following and market leading retention rates. I could not be more excited to partner with Acorns.” Institutional investors Wellington Management, Greycroft, TPG’s global impact investing platform, and funds managed by BlackRock also committed to a private placement as part of the announcement.

What investors should know about the Acorns IPO

There is growing discussion of whether or not Acorns’ investing model gives better returns than other robo-advisors or micro-investing companies. Betterment, Robinhood, and Wealthfront are Acorns’ closest competitors, and have also benefited from record growth in 2020. Additionally, Acorns only offers ETFs unlike other passive investment companies that offer wider investment choices.  And while Acorns was only censured for its record keeping, there have been no reports that its acquisition of a digital data management platform will resolve future problems. However, Acorns continues to be the largest subscription service in consumer finance by focusing on passive investors who would otherwise not invest at all. Kerner states that Acorns is “focused on long-term financial wellness and helping customers get and stay committed to their long-term financial best interests.” and the industry is showing confidence in micro-investing companies, including BlackRock, the world’s biggest money manager who bought a stake in Acorns with its own money. Acorns realized $71 million in 2020 revenue, according to the WSJ, and it projects $126 million in 2021, and $309 million in 2023.  Most importantly, reports Acorns is not profitable. Although Acorns boasts a gross margin of over 80%, mainly thanks to its ownership of its tech, it ultimately remains in the red and expects to stay there for years to come. However, many insiders predict Acorns will continue to deliver revenue growth and grow the ebitda margin over the long-term.

Bottom line

Acorns expects the merger and IPO to be complete by the end of 2021 and to be trading as “OAKS” on the NASDAQ. The company has expanded its offerings as it has gone to tap into the needs of its target demographic with Acorns Later (IRAs), Acorns Spends, Acorns Early (for children) and Acorns Earn. As one of the first micro-investing platforms, Acorns continues to be out in front as its subscribers continue. Acorns is exploring expanding into other jurisdictions, both nationally and internationally which will help it to sustain growth of subscribers. Acorns remains the category leader and category innovator as mobile passive investment companies grow. Acorns currently serves 8.2 million customers and has over $3 billion in assets under management.

Related: What you need to know about a Stash IPO.

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