US savings and investment startup Acorns has acquired London-based GoHenry, a startup focused on providing money management and financial education services to youth ages 6 to 18 in an equity deal, the two companies announced.
The company's combined valuation, as well as other financial terms, were not disclosed. When Acorns last raised funds, $300 million in March 2022, he was valued at $2 billion; GoHenry hasn't disclosed its valuation, but it was believed to be valued between $250 million and $500 million as of October 2022, when it raised $55 million.
The acquisition is notable for a couple of reasons. For one thing, if the companies have managed to hold their valuation level (valuations have seen a lot of pressure in the last six months), it would be one of the largest M&A deals between two fintech startups, at one point. in which new companies have found it. very difficult to raise more funds, either from private investors or from the public markets through an initial public offering.
Second, it will add a number of new sponsors for Acorns. GoHenry's investors include Edison Partners, Revaia, Citi Ventures, Muse Capital and Nexi, with all refinancing their share of the deal.
Ultimately, this gives Acorns an opportunity to grow internationally, starting with GoHenry's existing footprint in the UK, France, Italy and Spain.
The companies did not provide specific details on individual metrics, saying only that the combined company will have nearly 6 million subscribers. The data above helps break down the mix, but it also points to one or both of them losing some users of late. In March 2022, CEO Noah Kerner had said that the company had more than 4,6 million paying subscribers. Last October he said he had 2 million customers.
Since its creation in 2012, aCorns has raised just over $500 million from investors including private equity firm TPG, BlackRock, Greycroft, Owl Rock (a division of Blue Owl), Senator Investment Group, Torch Capital, Industry Ventures, Bain Capital Ventures, Galaxy Digital, Headline and Kevin Durant and Thirty-Five Companies by Rich Kleiman.
Acorns is entering this deal after facing a setback in a previous exit plan of his own. The company originally intended to go public and in 2021 presented plans to do so through a SPAC. At the time, it had projected revenue of $126 million for the year. But with the SPAC market facing a lot of problems and the tech IPO market drying up by the end of 2021, Acorns scrapped its SPAC IPO plans in January of 2022.
GoHenry (named for its first child client, according to the company) has raised a total of $125 million since it was founded in 2012. It brought in $42 million in revenue in 2021 (the last full year), double what it earned in 2020.
Neither Acorns nor GoHenry, which are 10 years old, were profitable at the time of their latest increases.
Acorns began initially targeting younger adults, specifically millennials, before opening its first children's services. GoHenry will help you expand into that market segment. Since its inception, GoHenry has focused on the 6-18 age group, who currently use two of the company's main services: a prepaid debit card (usually topped up by parents) and a "financial education" app that it links to that card, plus an app parents can use to help monitor and manage the account. Until last summer, GoHenry operated in the UK and the US, where it had expanded in 2018. It also began serving France and Spain when it acquired French startup Pixpay last July and also opened in Italy in January this year.
Acorns has evolved its offer to also include investment services, debt management and a product aimed at children, Corns Early which launched in June 2020. Acorns Early allows parents, guardians, family members and friends to easily invest in a child's future. Before GoHenry, Acorns had also acquired Vault, Harvest Platform and Pillar.
Executives from the two companies say the combined company will allow them to serve customers at all stages of life, from birth to retirement. Acorns claims it has helped Americans save and invest more than $16 billion since its founding, while GoHenry clients have saved $130 million in the past five years. The acquisition now puts Acorns directly in competition with other US-based fintechs that already offer debit cards to children and/or teens, including Greenlight, Step and Current.
“We've both been dreaming of this idea of financial wellness for the whole family for a long time,” Kerner said in an interview, noting that the companies have been in talks for two years. “So to be able to serve children, teens and adults holistically within a global company is really exciting.”
GoHenry co-founder Louise Hill said she is "excited with the opportunities" the combination will unlock.
“It is very much a shared vision/mission, looking out for the best interests of families and those to come: ordinary people,” he said. "To be able to expand and offer the same approach to financial wellness to adults is also very exciting."
The combined company, which offers subscription services, has more than 700 employees. While the settlement was primarily equity, there was a "small cash consideration," Hill said, which was due more to "administrative necessity than anything else."
The decision to acquire GoHenry was not made lightly, according to Kerner, who said Acorns evaluated "more than 100" companies globally.
“We have been very focused on the US market with our products, but have always had aspirations to deliver globally. This allows us to speed up that path.”
Hill said GoHenry also always intended to go global.
“Our teams have been talking together for more than two years, and it became more and more obvious that the right way to go was to come together,” he said.
In the US, GoHenry will operate as GoHenry by Acorns. In the UK and Europe, GoHenry and PixPay will continue to operate under their own brands.
As the IPO market has dried up, many industry watchers have predicted that the fintech space would see more consolidation. And so far in 2023, we've seen a number of M&A deals like this one.
For example, earlier this year, Marqeta announced plans to acquire two-year-old fintech infrastructure startup Power Finance for $223 million, marking the first acquisition in that publicly traded company's 13-year history. Also in January: Investment giant BlackRock announced it was acquiring a minority stake in startup SMB 401(k) provider Human Interest. Payroll startup Deel acquired fintech Capbase; Fidelity acquired stock management startup Shoobx; Vouch, an insurtech focused on startups, acquired Level and American Express signed an agreement to acquire Nipendo.
