Investing

Investing App Acorns To Go Public In $2.2 Billion SPAC Deal Amid Fintech’s Massive Boom

Topline

Acorns Grow Inc., the Irvine, Calif. firm behind the synonymous investing and savings app, announced Thursday morning it has agreed to go public by merging into a special-purpose acquisition company in a deal that values the seven-year-old startup at $2.2 billion—marking the latest in a slew of deals catapulting the valuations of buzzy young fintech companies.

Key Facts

In a deal that nearly triples its valuation from two years ago, Acorns will merge into Pioneer Merger Corp., a SPAC led by technology veterans including Uber Cofounder Oscar Salazar, Lifelock Cofounder Todd Davis and Mitchell Caplan, a former E-Trade CEO.

Institutional investors participating in the round include Wellington Management, Declaration Partners and The Rise Fund, the impact-investing arm of the private equity firm founded by billionaires Jim Coulter and David Bonderman.

Though it’s still subject to approval by Pioneer shareholders, the transaction is expected to close in the second half of this year.

Key Background

Acorns, which claims to be the largest subscription-based fintech startup in the nation, joins a growing wave of buzzy fintech firms announcing multi-billion-dollar takeovers and deals to go public this year. Earlier this month, publicly traded Bill.com said it has agreed to acquire corporate card startup Divvy, which launched just one year ago, for $2.5 billion in cash and stock, and online lending company SoFi announced in January it will merge into one of the blank check companies headed by “SPAC King” Chamath Palihapitiya in a $9 billion deal. In addition, Investing app e-Toro landed a $10 billion SPAC deal in March. According to Pitchbook, 2021 is on track to be the second-biggest year ever for fintech IPOs and mergers—with some $35 billion in deals announced thus far, behind only a record 2019 that saw more than $150 billion in activity.

Big Number

4 million. That’s roughly how many users Acorns counts. Each pays between $1 to $5 per month for services that include the company’s staple “round-up” feature, which moves extra pennies from credit and debit card transactions into exchange-traded funds, as well as retirement accounts and debit card-equipped checking accounts.

Tangent

Despite SPACs soaring in popularity during the pandemic, their performance has languished this year amid a government crackdown to help cool the red-hot market. The first-ever SPAC ETF, which tracks companies both before and after deals, is down about 30% from a February high.

Further Reading

The Future Of Personal Finance: Fintech 50 2020  (Forbes)

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