- Micro-investor fintech Acorns has acquired child and teen-focused digital banking startup GoHenry for an expansion into Europe.
- Acorns said it now has a combined 6 million customers after acquiring Gohenry.
- The deal marks a big growth bet for Acorn, which until now was only available in the US
Noah Kerner, CEO of Acorn.
Adam Jeffery | CNBC
LONDON — American micro-investing platform Acorns has acquired GoHenry, a digital banking startup focused on educating kids 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 Acorn, with Gohenry employees and supporters taking their equity.
Founded in 2012, GoHenry offers a spending card for children ages 6 to 18, linked to an accompanying money management app. Parents can track their kids’ transactions in real time and set spending limits or savings goals.
The timing of the agreement is noteworthy. The fintech sector is enduring a tough environment characterized by high inflation and rising interest rates. It’s sensitivity around the market has caused share prices of many publicly-listed companies to fall. This, in turn, has had a knock-on effect for privately held fintechs, with many late-stage firms seeing their valuations drop sharply.
However, Noah Kerner, CEO and co-founder of Acorns, stressed that market conditions will have no impact on the timing of the acquisition as talks between the two companies began in early 2021.
Acorn’s interest in financial wellness for families “goes back many years,” he said, starting in 2020 with the launch of Acorn’s Early – an investment account for kids.
Acorns looked at more than 100 deals worldwide before landing GoHenry, Kerner said, adding that a $55 million cash infusion into GoHenry last year and the purchase of French rival PixPay made the deal more attractive.
“We pioneered kids and teens with GoHenry, and Acorns is a huge investment,” GoHenry co-founder and chief operating officer Lewis Hill told CNBC in an interview. And pioneering to bring savings and mental wellness.
Louise Hill, co-founder of GoHenry, at the IFGS 2022 Summit at the Guildhall in London, UK on Monday, April 4, 2022.
Chris Ratcliffe Bloomberg Getty Images
“But we both had ambitions to expand beyond that in terms of customer demographics, so that we could start serving people throughout their lifecycle, through all walks of life.”
Instead of offering a free service and making money from exchange fees, GoHenry charges parents a monthly subscription, which it says pays for features like paid functionality and the ability to set up parental controls.
Acorns, meanwhile, focuses on investing, allowing customers to automatically invest spare change from card payments into index funds.
Acorn also charges a monthly subscription fee. The company said it now has a combined 6 million subscribers after acquiring Gohenry.
Despite this, GoHenry’s acquisition of Acorns signals a big growth bet for the company, which until now was only available in the US, with the purchase of GoHenry, it will now be able to enter Europe, a market less developed when it comes to that. To invest in retail.
GoHenry has operations in the UK, France, Spain and the US.In the US, GoHenry’s app will be renamed GoHenry to Acorns. GoHenry will still be called GoHenry in the UK, while its name will remain the same in France and Spain, where it is known as PixPay.
Kerner and Hill would not comment on the value of the transaction, but Kerner said it represents a good deal for GoHenry and its shareholders.
Acorns was valued at $1.9 billion in a $300 million funding round after scrapping 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 following the GoHenry deal.
Prior to 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 faces stiff competition from rivals with their own child-focused offerings, including Revolut which launched its own account for kids in 2020 and established banks such as NatWest.
GoHenry also struggled to book a profit and posted a £30.9 million ($38 million) loss on £30.6 million revenue in 2021, according to a Companies House filing. Acorns is also losing money, but Kerner says its goal is to become a profitable company.
Watch: Why retail investment has taken off in the US – but not Europe