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Acorns’ new fintech target is debt management with acquisition of Pillar – TechCrunch


Popular saving and investing app Acorns has acquired Pillar, an AI-powered startup built to help manage student loan debt, in its second acquisition of 2021.

New York-based Pillar helps consumers optimize their debt payments by focusing first on student loans. It launched in May 2019 with $5.5 million in seed funding led by Kleiner Perkins. The companies declined to reveal the financial terms of the deal, only noting that within six months of launching, Pillar managed over $500 million worth of student loan debt of more than 15,000 borrowers. 

Michael Bloch dropped out of Stanford Business School and co-founded Pillar after he and his wife had amassed more than $500,000 of student loan debt after she graduated from law school. Prior to that, he had led the Strategy & Operations division for DoorDash, growing it to $100 million in revenue. The problem Pillar has aimed to tackle is massive. Student loan debt is the second-largest type of consumer debt in the U.S., with 45 million borrowers collectively owing nearly $1.7 trillion in student loans.

Notably, Acorns was apparently one of several companies that had courted Pillar.

“We were in a pretty lucky position to have a lot of interest from many of the top fintech companies that are out there,” Bloch told TC. “We had multiple offers on the table and Acorns was really our top choice just given how the business has been doing and the team, the culture and the mission.”

The deal marks the second acquisition this year and third overall for Acorns, which says it notched its strongest quarter in its history the first three months of this year. In March, Acorns also acquired Harvest, a fintech that helped customers reduce more than $4 million in debt in 2020.

The Pillar and Harvest teams will help Acorns accelerate its product roadmap of helping customers pay down debt, “an essential part of the financial wellness system,” said CEO and founder Noah Kerner.

Over time, Pillar will become part of one of Acorns’ monthly subscription tiers. 

“The IP and technology that the Pillar team created in debt management is really interesting to us when we think about how we scale our Smart Deposit feature,” Kerner said.

With Smart Deposit, when a customer’s paycheck hits the Acorns bank account, the app automatically allocates a percentage of that paycheck into an individual’s different investment accounts. 

“From a behavioral perspective, the best way to get somebody to save and invest is to enable them to set aside a piece of their paycheck as soon as it hits the account so that they don’t spend it. That feature has been really well adopted by our direct deposit customers,” Kerner said. “And so Michael and his team are coming in to manage that feature, and also our bank accounts product. I think their past experience is going to be really useful for us to take what we have and help the team catalyze it further.”

With its latest acquisition, Irvine, California-based Acorns now has more than 350 employees. In 2017, the company acquired Vault, now called “Acorns Later.” As a result of that acquisition, the company has seen its number of retirement accounts grow to 1.2 million from 500.

As mentioned above, Acorns has had a good year so far. In the first six weeks of 2021, the company added nearly 600,000 new accounts, reaching a total of more than 9 million users having saved and invested a total of $7.5 billion.

“The first quarter was our biggest growth quarter on record,” Kerner told TC. “In particular we crossed the $4.3 billion in dollars in assets under management, which is a really exciting milestone when you think about the fact that these are customers that are saving small amounts of money in the relative scheme of money invested typically.”



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