Today, U.S. savings and investment firm Acorns bought London-based GoHenry, which provides money management and financial education to 6-18-year-olds, in an all-equity deal.
Company value and financial specifics were not published. However, acorns raised $300 million in March 2022 and were valued at $2 billion; GoHenry raised $55 million in October 2022, valued between $250 million and $500 million.
Two factors make the acquisition significant. For one, if the companies have managed to keep their valuations level (valuations have seen a lot of pressure in the last six months), it would be one of the biggest M&A deals between two fintech startups at a time when startups have struggled to raise funding from private investors or public markets via an IPO.
Second, Acorns’ cap table will get new investors. Edison Partners, Revaia, Citi Ventures, Muse Capital, and Nexi are rolling over shares in GoHenry.
Finally, GoHenry’s presence in the U.K., France, Italy, and Spain allows Acorns to expand globally.
The firms merely said the merged entity would have roughly 6 million users. The TechCrunch article helps us break down the mix but also suggests either or both lost users recently. In March 2022, CEO Noah Kerner informed TechCrunch the firm had over 4.6 million paying members. GoHenry reported 2 million customers last October.
Acorns has raised over $500 million from investors like 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 & Rich Kleiman’s Thirty-Five Ventures since its 2012 founding.
Acorns entered this agreement after its departure strategy failed. In 2021, the business announced a SPAC IPO. The deck studied by Alex Wilhelm estimated $126 million in revenue for the year. However, acorns canceled its SPAC IPO plans in January 2022 due to market issues and the tech IPO market drying up at the end of 2021.
Since 2012, GoHenry—named after its first child customer—has raised $125 million. In 2021, its income doubled to $42 million.
During their recent increases, 10-year-old Acorns and GoHenry were not profitable.
Acorns first targeted millennials, then children. Next, GoHenry will expand its market share. GoHenry has focused on the 6–18 age range from its founding, offering a prepaid debit card (filled up by parents) and a “financial education” app that attaches to it (and an app that parents can use to help monitor and manage the account). GoHenry was UK-based until last summer. Then, in 2018 to the U.S. After acquiring French firm Pixpay last July, it expanded into France, Spain, and Italy in January.
In June 2020, Acorns released Acorns Early, a product for youngsters. Acorns Early helps parents, guardians, relatives, and friends invest in a child’s future. In addition, Acorns purchased Vault, Harvest Platform, and Pillar before GoHenry.
The merged company’s leaders say they can service consumers from birth to retirement. Acorns claims to have helped Americans save and invest over $16 billion since its creation, while GoHenry users saved $130 million in the previous five years. The purchase directly rivals Acorns with Greenlight, Step, and Current, a U.S. fintech providing children and teenagers debit cards.
Kerner told TechCrunch that the firms had been discussing financial wellness for the whole family for two years. So serving kids, teenagers, and adults holistically in one organization internationally is incredibly exciting.”
The combination “excites” GoHenry co-founder Louise Hill.
“It’s very much a common vision/mission, looking at the best interests of families, and the up and coming – the daily people,” she said in an interview. “Expanding and offering the same financial well-being strategy to adults is incredibly exciting.”
The united subscription service firm has about 700 workers. Hill claimed the sale was mostly equity with a “small monetary payment” for “administrative necessities.”
Kerner claimed Acorns considered “over 100” firms before buying GoHenry.
“We have always had goals to offer globally,” he told TechCrunch. “This speeds that path.”
Hill said GoHenry always wanted to globalize.
“Our teams have been discussing together for over two years, and it just became more and more evident that the appropriate way was to join together,” she added.
Acorns will run GoHenry in the U.S. The U.K., Europe, GoHenry, and PixPay will keep their brands.
Several industry experts foresaw fintech consolidation as the IPO market dried up. Instead, M&As occurred in 2023.
Marqeta, a publicly traded business, acquired two-year-old financial infrastructure startup Power Finance for $223 million in cash earlier this year. In January, BlackRock acquired a minority stake in SMB 401(k) provider startup Human Interest; remote payroll startup Deel acquired fintech Capbase; Fidelity acquired equity management startup Shoobx; Vouch, a startup-focused insurtech, acquired lending startup Level; and American Express agreed to acquire Nipendo.