As banking giveaways go, fintech company Acorns is offering Chicagoans something a little more valuable than the traditional pens and calendars.
Acorns is handing out cold, hard cash.
On Thursday, Acorns debuted its compounding vending machine at Big Star Wrigleyville, an out-of-the-box promotion that replaces potato chips with simulated investments, dispensing up to $15 in cash for a $1 fee, essentially providing a 30-year return in 30 seconds.
“This is the first vending machine that grows your money rather than takes it,” said Acorns CEO Noah Kerner, founder of the Irvine, California-based company. “That’s the idea.”
Designed to demonstrate the power of compound growth to potential investors, the custom vending machine is loaded with enough cash to pay out 2,000 people between $7 and $15 each, representing returns on a potential 25- to 35-year investment. The promotion will run for three days or until the cash is gone – whichever comes first.
While the money is free, Acorns is hoping to get people to reinvest their windfall, offering a matching amount to open an account, Kerner said.
Launched in 2014, Acorns has carved out a niche helping 14 million people save and invest more than $30 billion, mostly through “spare change.” The Acorns app connects to a debit or credit card and automatically rounds up purchases to the next highest dollar amount, investing the balance in portfolios of exchange-traded funds spanning stocks and bonds to bitcoin.
Acorns also offers recurring investment plans that can draw a small daily amount – say $5 – out of your bank account and into your investment portfolio. All users are charged a minimum monthly fee starting at $3.
Either way, the nickels and dimes can add up, with Acorns customers investing an average of $163.53 per month nationwide. If invested monthly at an 8% annual return, that amount could grow to $96,949 over 20 years, the company said.
The goal of the micro-investing platform is to build a long-term nest egg starting with the change most people throw in a jar.
“You’re talking about people saving and investing without really feeling it, which is really helpful,” Kerner said.
Chicago is a robust market for Acorns with 38,000 customers investing an average of $168.50 per month, the company said. The vending machine promotion is looking to expand that base.
The machine is stationed at Big Star Wrigleyville, a popular taco restaurant on North Clark Street, from Thursday through Saturday. Users can tap a credit or debit card, pay $1 and then choose one of five investment time horizons between 25 and 35 years. The machine will then spit out a roll of one-dollar bills corresponding with the selection, wrapped in a one-sheet sales pitch.
There’s also an on-screen explanation of compounding as well, Kerner said.
Like any vending machine, supplies are limited, so the higher payouts are likely to sell out quickly, with no plans to restock during the first come, first served promotion. The total three-day payout will exceed $20,000, Kerner said.
To help win new customers, Acorns is offering to match the vending machine payout to open a new investment account.
While skeptics may be concerned they are setting themselves up for something akin to a lengthy time share pitch, Kerner said those so inclined can complete the transaction within 30 seconds and simply take the money and run. Like any marketing budget, the vending machine investment will nonetheless get the word out about Acorns, he said.
“Regardless, every person who’s interacted with the machine has learned about compounding,” Kerner said. “So that’s a win.”
Kerner chose Chicago over Los Angeles and New York for the inaugural campaign to “start things in the middle of the country.” Chicago has a history of launching unusual vending machines, including Farmer’s Fridge, which pioneered salad offerings where soda, candy bars and potato chips usually tantalized hangry passersby from behind glass. But the Acorns machine may be the first to dispense the spending kind of cabbage.
With the Cubs opening the season Thursday at home against the Washington Nationals, it’s unclear if the free-money giveaway will last through Saturday amid the expected Wrigleyville crowds.
On the other hand, with the price of gas averaging upward of $5 per gallon in the Chicago metro, driving in from Lombard just to score a wad of one dollar bills may not be the best return on investment for some.
After its debut weekend in Chicago, Acorns is planning to refill the vending machine with cash and bring it to another market. Like the Acorns investing philosophy itself, time will tell how successful the promotion is in generating new business.
rchannick@chicagotribune.com
