Acorns Expands Financial Wellness Offering with Pillar Acquisition

Acorns, a widely used saving and investment application, has completed the acquisition of Pillar, an AI-driven startup specializing in student loan debt management. This marks Acorns’ second acquisition in 2021, demonstrating a clear strategy for growth and service expansion.

Pillar's Focus and Early Success

Based in New York, Pillar concentrates on assisting consumers in optimizing their debt repayment strategies, with a primary emphasis on student loans. Launched in May 2019, the company secured $5.5 million in seed funding, spearheaded by Kleiner Perkins. Within a six-month period following its launch, Pillar successfully managed over $500 million in student loan debt for more than 15,000 borrowers.

The Founding Story of Pillar

Michael Bloch, the co-founder of Pillar, made the decision to leave Stanford Business School to address a personal challenge. He and his wife faced over $500,000 in student loan debt following her graduation from law school. Prior to founding Pillar, Bloch held a leadership position at DoorDash, overseeing the New York and California regions and achieving $100 million in revenue.

The scale of the problem Pillar aimed to solve is substantial. Student loan debt represents the second-largest category of consumer debt in the United States, impacting 45 million borrowers with a collective outstanding balance of nearly $1.7 trillion.

Acorns as the Preferred Acquirer

It is reported that Acorns was not the only company interested in acquiring Pillar. Multiple offers were received, but Acorns emerged as the top choice.

“We were fortunate to receive considerable interest from leading fintech companies,” Bloch stated to TechCrunch. “Acorns stood out due to its strong business performance, team dynamics, and overarching mission.”

Acorns' Acquisition Strategy and Growth

This acquisition represents the second for Acorns in 2021 and the third overall. The company reported its most successful quarter to date during the first three months of the year. In March, Acorns also finalized the acquisition of Harvest, a fintech company that facilitated debt reduction of over $4 million in 2020.

Integrating Pillar and Harvest into Acorns

The teams from both Pillar and Harvest will contribute to accelerating Acorns’ product development, specifically focusing on debt repayment solutions. This aligns with Acorns’ vision of providing a comprehensive financial wellness system, according to CEO and founder Noah Kerner.

Over time, Pillar’s technology will be integrated into Acorns’ existing monthly subscription plans.

Leveraging Pillar's Technology

“The intellectual property and technology developed by the Pillar team in debt management are particularly valuable as we look to enhance our Smart Deposit feature,” Kerner explained.

Smart Deposit automatically allocates a portion of a customer’s paycheck to various investment accounts upon deposit. This feature encourages saving and investment by prioritizing it before spending occurs. It has seen significant adoption among Acorns’ direct deposit customers.

“Michael and his team will be instrumental in refining this feature and our bank accounts product, bringing their expertise to further catalyze our progress,” Kerner added.

Acorns' Expanding Workforce and User Base

Following this latest acquisition, Acorns, headquartered in Irvine, California, now employs over 350 individuals. The company previously acquired Vault in 2017, which is now known as “Acorns Later.” This acquisition led to a substantial increase in retirement accounts, growing from 500 to 1.2 million.

Strong Performance in 2021

Acorns has experienced significant growth in 2021. In the first six weeks of the year, the company added nearly 600,000 new accounts, bringing the total user base to over 9 million. These users have collectively saved and invested a total of $7.5 billion.

“The first quarter was our most successful growth period ever,” Kerner shared with TechCrunch. “We surpassed $4.3 billion in assets under management, a remarkable achievement considering the relatively small amounts typically invested by our customers.”