Saving app Acorns raises $30m in PayPal-led funding round

Acorns, the start-up savings app, first mentioned in our briefings nine months ago, has raised $30m in a funding round lead by PayPal. Acorn users typically save $50 a month via small purchases being rounded up to the nearest dollar and although PayPal is purely an investor at this stage, the two firms reportedly see possible integration between Acorns and PayPal apps such as Venmo, its P2P money transfer app, in the future. Since its launch 20 months ago, Acorns has amassed 850k accounts. The company plans to use the funds raised to help expand its partnerships and automated investment features.

Acorns, the micro-investing app that allows users to invest their ‘spare change’ or ‘acorns’ in an automated manner, has today announced a $30 million round of financing. It was obtained from PayPal and with participation from the Rakuten Tech Fund and existing investors e.ventures and Greycroft Partners to help the company expand its partnerships and automated investment features, according to a company press release.

Jeff Cruttenden, co-founder of Acorns, speaks during the Money 20/20 conference in Las Vegas, Nevada, U.S., on Wednesday, Nov. 5, 2014.

Source: Bloomberg

Acorns was originally founded in 2012, and in recent years became more fintech focused as the company's app was launched and after setting up Acorns Advisers, LLC, which acts as the Registered Investment Advisor (RIA) with the Securities and Exchange Commission (SEC), and with its brokerage services handled via its SEC-registered broker-dealer Acorns Securities.

In barely 20 months since launching, the company has amassed 850,000 customer accounts, offering features like ‘Invest the Change’ which takes the difference between the cost of everyday card purchases and the nearest dollar rounded-up and invests the difference in a diversified portfolio of low-cost exchange traded funds (ETFs). Investing in low-cost ETFs has been a popular approach for automated investment platforms, including robo-advisor offerings.

Commenting in the official press release, Walter Cruttenden, co-founder and soon-to-be Chairman of Acorns, said: "Having PayPal and Rakuten as partners will make it possible to bring the benefits of micro-investing to more and more people around the world. We believe that micro-investing will ultimately comprise the majority of new investment dollars entering the markets."

"Acorns and PayPal share a vision of democratizing financial services and offering innovative solutions to help people build financial health," said Joanna Lambert, vice president of global consumer product and engineering at PayPal, commenting in the official press release.

Predominantly millennial customers

With nearly 75 percent of Acorns' users between the ages of 18 and 34, millenials continue to be drawn to the appeal of new fintech firms that Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term simple and intuitive mobile apps coupled with the ability to automate the investment process, and solutions like Acorns that enable micro-investing appear to be gaining ground, alongside the micro-insurance industry and micro-loan space.

We believe that micro-investing will ultimately comprise the majority of new investment dollars entering the markets.

Oskar Mielczarek de la Miel, Managing Partner at the Rakuten FinTech Fund, commented in the press release: "We are very excited about Acorns' high growth model and the close alignment between Acorns' philosophy of financial empowerment of the millennial community and Rakuten's core values."

"Technology is breaking down barriers to financial participation. PayPal is excited to support Acorns as they continue to use mobile technology to innovate in micro-investing, and empower millennials to take charge of their finances."

The news follows PayPal announcing a synergy with Village Capital aimed to democratize financial services for the poor, that Finance Magnates wrote about earlier last quarter, and the $23m that Acorn received previously from existing investors.

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