How Acorns Makes Money

Acorns makes money by charging users a monthly subscription and referral fees

Last Updated July 23rd 2021
7 Min Read

The financial service sector has undergone several changes in recent times. Changes in technology and digitalisation of services have resulted in the birth of several fintech companies.

Acorns is one such company offering several financial products and services, mostly in the field of investing, spending, and saving. It is a mobile-first investment platform that allows users to invest their spare change.

Acorns facilitates its members to open a savings and IRA account by saving money through its cashback program. It operates a platform that allows members to invest small sums of money at regular intervals - popularly known as micro-investing.

Acorns was founded in the year 2012 and is based out of Irvine, California. Since then, it has rapidly risen to become one of North America’s most used investment apps. So far Acorns has raised $207 million and is valued at $860 million.

Key Points:

  • Acorns offer a platform to invest spare change in a diversified portfolio to grow wealth
  • It also offers services such as retirement savings accounts, debit card, and other essential banking services
  • Acorns generate income through its member subscription fees
  • Acorns is a fintech company that specialises in micro-investing.

Acorns offer basic banking services at low fees. The company offers its services in three primary categories – ETFs, IRA, and debit cards. Acorns enable its members to invest their spare changes in ETFs (Exchange-Traded Funds). It also allows users to create and fund an IRA through its platform and offer members debit cards provided by companies such as Visa. Acorns offer membership subscriptions for as little as $1, $3, and $5 per month for various service packages.

One of the main reasons for its popularity is that Acorns appeals to millennials, people new to investing, and those who may not have significant capital saved for their retirement. Acorns strive to enable its users to invest early, with minimal effort. An Acorns member invests over $30 per month through Round-Ups, its signature program.

Read Also: Best Long-Term Investments

Acorns In The Fintech Industry

Acorns is best known as a micro-investing platform that lets users set up automated investment portfolios through Round-Ups. A debit or credit card purchase made on a linked card is rounded to the nearest dollar and the change is invested on behalf of its members. To minimise risk, investments are made into five different portfolios with different risk levels. Acorns focus heavily on millennial investors.

How Acorns Make Money?

Acorns generates income by charging users a monthly subscription fee. It offers three membership plans – Lite, Personal, and Family. It also earns revenue from referral fees from its cashback program, interest earned on cash, and the annual management fee for accounts worth over $5,000.

Fundraising And Financials

The latest figures, as of March 2021, show that Acorns has more than 6.8 million users. It is an improvement from the 4.6 million users it had in the previous year. About 1 million of those accounts hold IRAs and the company stated that more than $1 billion was invested through its platform until now.

According to reports, Acorns has had 10 funding rounds and it has raised hundreds of millions of dollars. Its backers include some of the prominent names such as NBCUniversal Media LLC, Paypal Holdings Inc., and Black Rock Inc. Acorns latest fundraising has yielded a valuation of $860 million. It has surpassed its rival Betterment in valuation.

History And Leadership

A father-and-son entrepreneurial duo, Walter and Jeff Cruttenden, founded Acorns in 2014. Walter Cruttenden had also founded the investment banking firm Roth Capital. He was also the founder and CEO of the investment banking unit of E*Trade.

The company now is commanded by CEO Noah Kerner, who formerly led the creative branding agency Noise. He was Chief Strategy & Marketing Officer for WeWork as well. In an effort to grow Acorns' user base to 100 million customers, Kerner has channelled high-profile celebrities such as Jennifer Lopez and Alex Rodriguez.

Recent Developments

In October 2020, Acorns announced a partnership with the online job market ZipRecruiter. This collaboration means that Acorns users can now browse and apply for jobs within its app.

According to Kerner, establishing a jobs portal on the app was always on the company's plans, but the significant increase in unemployment due COVID-19 pandemic triggered the implementation.

In 2019, Acorns also forged a partnership with CNBC to make information on investing and finance available to a wider audience through Acorns' Grow website. In the same year, Kerner had indicated that Acorns was not seeking to go public.

How Does Acorns Work?

As mentioned elsewhere, Acorns is a micro-investing service that allows users to invest their spare change. The company links the user’s credit card or bank account. As a result, it can suggest if they want to set aside a portion of their spending to invest in a portfolio.

For instance, if you are a member and you buy a coffee for $3.50, Acorns will automatically suggest if you wish to set aside a portion of the money (say, $0.50) to their portfolio.

Acorns is a favoured platform among millennials because users can create an investment portfolio with a few clicks. Depending on your appetite for risk (conservative to aggressive), Acorns will invest money into an assortment of Exchange Traded Funds (ETFs). The company will begin investing for you when your pool of change totals $5.

Acorns also has an option called Later, where it sets aside a selected portion every month (starting with as little as $5) to invest into the company’s Individual Retirement Accounts. The portfolio is carefully chosen after considering a user’s age and proximity to retirement.  

Later allows Acorns users to transfer payments into the IRA accounts from their taxes. As a result, they are only taxed as income when they retire. It means that you don’t have to worry about any taxable capital gains.

Another scheme offered by Acorns is Earn, where the company partners with its Found Money partners. This allows Acorns users to earn cashback rewards whenever they make a purchase. As there is a wide range of partners such as Airbnb, Nike, Stitch Fix, Walmart, and many more, users can earn a lot of rewards. They can either use their own credit cards or Acorns’ checking account.

Acorns also has a scheme named Early, where parents can open an investment account for their kids. Parents can decide on monthly, recurring investments that are automatically deducted from their bank accounts. Apart from that Acorns has partnered with CNBC to develop educational material for families, intending to increase their financial literacy.


Acorns is a mobile-first company. It means that its products are mostly available via mobile applications. It makes Acorns a favoured fintech company among millennials. Users can access Acorns either on Android or iOS and it is easy to transact on a mobile device.

Although as a private company, Acorns is not obligated to disclose its revenue, reports suggest that the company is close to becoming a $100 million enterprise. It certainly is a company that has proved that small savings can make a huge difference.

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