- Micro-investment fintech Acorns has acquired digital banking startup GoHenry, focused on children and teenagers, to drive expansion in Europe.
- Acorns said it now has a total of 6 million subscribers after acquiring GoHenry.
- The deal marks a big growth bet for Acorns, which has until now only been available in the US
Noah Kerner, CEO of Acorns.
Adam Jeffrey | CNBC
LONDON — US micro-investment platform Acorns has acquired GoHenry, a digital banking startup focused on teaching children about money, for an undisclosed sum.
The company told CNBC exclusively that it has agreed to an all-stock deal with GoHenry that will see the firm become a wholly owned subsidiary of Acorns, with GoHenry employees and supporters transferring their equity.
Founded in 2012, GoHenry offers a spending card for children aged six to 18 linked to a companion money management app. Parents can track their kids’ transactions in real time and set spending limits or savings goals.
The timing of the deal is remarkable. The financial technology sector has endured a difficult environment characterized by high inflation and rising interest rates. It’s a shaky mood in the market, with the share prices of many publicly listed companies falling. This in turn has an additional effect on private fintech companies, with many late-stage firms seeing their valuations plummet.
However, Noah Kerner, CEO and co-founder of Acorns, insisted that market conditions had not affected the timing of the acquisition, as talks between the two companies had already started in 2021.
Acorns’ interest in the financial well-being of families “goes back many years,” he said, beginning in 2020 with the launch of Acorns Early, an investment account for children.
Acorns looked at more than 100 deals globally before landing on GoHenry, Kerner said, adding a $55 million cash infusion into GoHenry last year and a buyout of rival PixPay in France made the deal more attractive.
“We’re pioneering kids and teens with GoHenry, and Acorns are very much pioneering investing and saving and mental health in emerging, everyday America,” said Louise Hill, GoHenry’s co-founder and COO, in an interview with CNBC.
Louise Hill, co-founder of GoHenry, at the IFGS 2022 Summit at the Guildhall in London, UK on Monday 4 April 2022.
Chris Ratcliff | Bloomberg | Getty Images
“But we both had ambitions to go beyond that in terms of customer demographics so that we could start serving people across their entire lifecycle, through all stages of life.”
Instead of offering a free service and making money from exchange fees, GoHenry charges parents a monthly subscription that it says pays for features like the ability to set up paid obligations and parental controls.
Acorns, meanwhile, focuses on investments, allowing customers to automatically invest change from card payments into index funds.
Acorns also charges a monthly subscription fee. The company said it now has a total of 6 million subscribers after acquiring GoHenry.
However, Acorns’ acquisition of GoHenry signals a big growth bet for the company, which has until now only been available in the US. By buying GoHenry, it will now have access to Europe, a market that is less advanced when it comes to retail investing.
GoHenry has operations in the UK, France, Spain and the US. In the US, GoHenry’s app will be renamed GoHenry by Acorns. GoHenry will still be called GoHenry in the UK, while its name in France and Spain, where it is known as PixPay, will also remain the same.
Kerner and Hill would not comment on the price of the deal, but Kerner said it represented a good deal for GoHenry and its shareholders.
Acorns was valued at $1.9 billion last year in a $300 million funding round after abandoning plans to go public through a merger with a special purpose acquisition company, or SPAC, due to volatile market conditions.
It’s unclear what the company’s latest valuation is after the GoHenry deal.
Before being acquired by Acorns, GoHenry raised a total of $121.2 million from investors including Edison Partners, Gaia Capital Partners, Citi Ventures and Muse Capital.
The company has faced stiff competition from rival firms with their own child-focused offerings, including Revolut, which launched its own account for children in 2020, and established banks such as NatWest.
GoHenry has also struggled to post a profit and reported a loss of 30.9 million pounds ($38 million) on revenue of 30.6 million pounds in 2021, according to a Companies House filing. Acorns is also losing money, but Kerner said her goal is to become a profitable company.
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