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 exclusively told CNBC that it has agreed to an all-stock deal with GoHenry, which will see the firm become a subsidiary of Acorns, with GoHenry employees and supporters transferring their equity.
Founded in 2012, GoHenry offers a payment card for children ages 6 to 18 linked to a money management app. Parents can track their children’s transactions in real time and set spending limits or savings goals.
The timing of the deal is noteworthy. The fintech sector is experiencing difficult conditions characterized by high inflation and rising interest rates. This has spoiled market sentiment, with share prices of many listed companies falling. This, in turn, affected private fintech companies, as many late-stage firms saw 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 began as early as 2021.
Acorns’ interest in financial well-being for families “goes back many years,” he said, beginning in 2020 with the launch of Acorns Early, an investment account for children.
Kerner said Acorns considered more than 100 deals around the world before landing on GoHenry, having invested $55 million in GoHenry last year, while its buyout of rival firm PixPay in France made the deal more attractive.
“We’ve pioneered children and teens with GoHenry, and Acorns has pioneered investing and saving and mental health in America’s up-and-coming America,” said Louise Hill, co-founder and COO of GoHenry, in an interview with CNBC. an interview.
Louise Hill, co-founder of GoHenry, at the IFGS Summit 2022 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 throughout their lifecycle, at all stages of life.”
Instead of offering a free service and making money from sharing fees, GoHenry charges parents a monthly subscription, which it says pays for features like the ability to set up paid chores and parental controls.
Acorns, meanwhile, focuses on investing, allowing customers to automatically invest card balances into index funds.
Acorns also charges a monthly subscription fee. The company said it has a total of 6 million subscribers after acquiring GoHenry.
Nevertheless, Acorns’ acquisition of GoHenry represents a serious growth bet for the company, which until now has only been available in the US. By buying GoHenry, it will gain access to Europe, a market that is less developed when it comes to retail investing.
GoHenry operates in the UK, France, Spain and the US. In the US, the GoHenry app will be rebranded as GoHenry by Acorns. GoHenry will continue to 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 was a good deal for GoHenry and its shareholders.
Acorns was valued at $1.9 billion in a $300 million funding round last year 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.
Prior to its acquisition by Acorns, GoHenry had 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 also struggled to turn a profit and posted a loss of 30.9 million pounds ($38 million) on a profit of 30.6 million pounds in 2021, the Companies House said in a statement. Acorns is also losing money, but Kerner said its goal is to become a profitable company.
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