Acorns buys British GoHenry, a fintech focused on 6-18 year olds

US-based savings and investment startup Acorns has acquired London-based GoHenry, a startup focused on providing money management and financial education services to 6-18-year-olds in an all-inclusive deal, the two companies announced today.

The overall valuation of the company, as well as additional financial terms, were not made public. When Acorns last raised $300 million in funding in March 2022, it was valued at $2 billion; GoHenry has not disclosed its valuation, but was believed to be valued between $250 million and $500 million in October 2022, when it raised $55 million.

The acquisition is notable for a couple of reasons. First, if the companies manage to hold their valuation levels (valuations have seen a lot of pressure in the last six months) it would be one of the bigger M&A deals between two fintech startups, coming at a time when startups have found it very challenging to obtain additional financing — either from private investors, or from public markets through an IPO.

Second, it will add a number of new backers to Acorn’s cap table. GoHenry’s investors include Edison Partners, Revaia, Citi Ventures, Muse Capital and Nexi, all of which are rolls over the equity in the agreement.

Finally, this gives Acorns an opening to grow internationally, starting with GoHenry’s existing footprint across the UK, France, Italy and Spain.

The companies would not provide specifics regarding individual metrics, saying only that the combined company would have nearly 6 million subscribers. Previous TechCrunch coverage helps us break down the mix, but also points to either or both losing some users recently. In March 2022, CEO Noah Kerner had told TechCrunch that the company had more than 4.6 million paid subscribers. GoHenry last October said it had 2 million customers.

Since its inception in 2012, Acorns has raised just over $500 million from investors such as private equity firm 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.

Acorns enters into this deal after it faced a setback on an earlier exit plan. The company originally had intentions of going public, and in 2021 it made plans to do so using a SPAC. At the time, it had projected revenue of $126 million for the year, according to the deck analyzed by our own Alex Wilhelm. But with the SPAC market facing many problems and the tech IPO market drying up in late 2021, Acorns scrapped its SPAC IPO plans in January 2022.

GoHenry (named after its first child customer, according to the company) has raised a total of $125 million since it was founded in 2012. It had $42 million in revenue in 2021 (the most recent full year it reported), double what it earned in 2020 .

Neither Acorns nor GoHenry – both of which are 10 years old – were yet profitable at the time of their latest raises.

Acorns first started targeting younger adults, specifically millennials, before also opening its first services to children in 2017. GoHenry will help it expand in that market segment. From its early days, GoHenry has focused on the 6- to 18-year-old age group, who currently use two main services from the company: a prepaid debit card (usually topped up by parents) and a “financial education” app that links to that card (and a app that parents can use to monitor and manage the account). Until last summer, GoHenry operated in the UK as well as the US, where it had expanded to in 2018. It also began serving France and Spain when it bought the French start-up Pixpay July last year, and it also opened for business in Italy in January this year.

Acorns has developed its offering to also include investment services, debt management and a product aimed at children, Acorns early which launched in June 2020. Acorns Early allows parents, guardians, family and friends to easily invest in a child’s future. Before GoHenry, Acorns had too acquired Vault, harvesting platform and pillar.

The two companies’ executives say the combined company will allow them to serve customers through all stages of life – from birth to retirement. Acorns claims it has helped Americans save and invest over $16 billion since its founding, while GoHenry’s customers have saved $130 million over the past five years. The acquisition now puts Acorns in direct competition with other US-based fintechs that already offer debit cards for children and/or teenagers, including Greenlight, Step and Current.

“Both of us have been dreaming about this idea for financial well-being for the whole family for a long time,” Kerner told TechCrunch in an interview, noting that the companies have been in talks for two years. “So it’s very exciting to be able to serve children, teenagers and adults holistically in one company globally.”

GoHenry co-founder Louise Hill said she is “excited about the possibilities” the combination will open up.

“It’s very much a shared vision/mission, looking out for the good of the family, and those to come — the regular people,” she said in an interview. “To be able to expand and offer that same approach to financial wellness to adults as well is hugely exciting.”

The combined company – both of which offer subscription services – has over 700 employees. Although the deal was primarily equity, there was a “small cash consideration,” Hill said, which was more of “administrative necessity than anything else.”

The decision to buy GoHenry was not easy, according to Kerner, who said Acorns evaluated “over 100” companies globally.

“We’ve been very focused on the US market with our products, but have always had ambitions to deliver globally,” he told TechCrunch. “This allows us to accelerate that path.”

Hill also said that GoHenry always intended to go global.

“Our teams have been talking for over two years and it just became more and more obvious that the right way to go was to come together,” she said.

In the US, GoHenry will operate as GoHenry by Acorns. In the UK and Europe, GoHenry & PixPay will continue to operate under their own brands.

As the IPO market has dried up, many industry observers had predicted that fintech space would see more consolidation. And so far in 2023, we have seen a number of M&A deals.

For example, earlier this year, Marqeta announced plans to acquire two-year-old fintech infrastructure startup Power Finance for $223 million in cash, marking the first acquisition in the publicly traded company’s 13-year history. Also in January: investment giant BlackRock announced that acquire a minority sharean SME 401(k) provider startup Human Interest; external start of salary Part bought fintech Capbase; Fidelity acquired Shoobx for share management; Vouch, an insurtech focused on startups, acquired lending startup Level and American Express entered into an agreement to buy Nipendo.

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