Acorns, a savings and investment software, has received $300 million in a Series F funding round, valuing the business at close to $2 billion.
The previous funding round for the New York-based Acorns was a $105 million Series E investment in January 2019 at an $860 million valuation.
This week, the company thought it wasn’t the right moment to go public, according to CEO Noah Kerner. Acorns have raised money in the interim to continue exploring new acquisitions — it bought two businesses in the first half of the last year — as well as to finance “expansion and innovation.”
Acorns: The Company And Its Future Planning
The business also intends to keep developing tools that enable families to “save, invest, and pursue education together.” Since its founding in 2012, the business has expanded its product line to include investing services, debt management, and the child-focused Acorns Early.
Acorns currently employ roughly 700 people, and CEO Noah Kerner said the company will continue to grow, especially in product development.
Regarding going public, the CEO referred to the company’s SPAC process as “a dry run for coming public.”
About The Leading Investor TPG
Private equity company TPG served as Series F’s lead investor, which was received by Kevin Durant and Rich Kleiman.
Kerner claimed simply that the business had “exceeded its public forecast” for 2021 and currently has more than 4.6 million paid subscribers, declining to provide sales or profitability data.
According to the company’s deck, which our own Alex Wilhelm examined when it planned to IPO via a SPAC last year, it anticipated annual revenue of $126 million. By August 2021, it had 4 million customers.
Additionally, that deck demonstrated how costly the procedure was even though Acorns was constantly increasing its income.
Reasons For Increasing And Decreasing Income Of Acorns
According to Alex, Acorns had a 61 percent increase in income between 2019 and 2020, going from $44 million to $71 million. Over the same period, its gross margin increased from 71 to 78 percent and the business believed it could increase that number to 77% in 2021.
But since the corporation has — for the time being — given up on its public goals, we’ll have to wait to learn whether it actually did.
Acorns’ deck also stated that it anticipated its operating income would decline from -$85 million in 2020 to -$20 million in 2021 and its operating cash flow to decrease from -$35 million to -$70 million.
Diversifying Acorns Portfolio With The Help Of Cryptocurrency
Acorns intend to introduce tailored portfolios, the option to include cryptocurrency exposure “to a diversified portfolio,” and additional family-specific products in 2022. In the past, Acorns’ customers’ portfolios were automatically constructed.
Kerner claimed that the intention is to increase their sense of engagement by allowing people to personalize their portfolios.
He told TechCrunch that “active interaction helps individuals learn more.” Therefore, at the time of decision-making, we are combining educational information and goods in one location.
Acorns plans to provide customers who choose to engage with “no more than 5 percent exposure” to cryptocurrencies, according to Kerner, who emphasised that there “will not be crypto trading on the Acorns platform.”
He went on to say that because it is an uncorrelated asset class, it makes complete sense to incorporate it as part of a balanced, broadly diversified.
According to Kerner, “We built that capability and muscle inside and we’re totally prepared to accomplish it.” As a result, when the moment is right, we are prepared to execute with extraordinary skill.
He claimed that since then, the business has “meaningfully” expanded its line of products and created “a trusted, mission-driven brand and platform that is cherished by its customers.” We think clients will start to think of Acorns as an all-in-one account provider as a result of its distinct value proposition, solid brand, and growing product line.
The company also encourages financial literacy through its customised engagement strategy, which helps clients develop and put into practise good saving habits.
Not just Acorns but other fintech companies have recently given up on SPAC aspirations. The business, however, opted not to proceed with the transaction in January and announced last week that it had raised $82 million in a Series D round of capital.