Morning Markets: Acorns has picked up a huge new round. Let’s go back and recall what we know about the savings-focused startup.
This week news broke that Acorns, a savings and banking startup, raised a $105 million Series E. The new capital comes from Comcast Ventures, NBCUniversal, and several private equity firms. Prior investors took part as well.
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The Irvine-based startup has now raised over $200 million, according to Crunchbase data.
Acorns is now worth $860 million according to Business Insider. If this round sounds familiar, it should. We’ve written about it a few times. Let’s go back in time to see how this deal came about, and then what it might mean for the startup.
Revenue And Product
In November of 2018, it was rumored that Acorns might raise $100 million or more. The new capital was said to value the company at as much as $700 million. As you can see, the original Bloomberg report was damn near spot on.
I was a bit skeptical at the time about the expected valuation. Given what was known about the number of Acorns accounts, and its revenue per year, the valuation felt high. I did a relatively pedestrian walk-through of the numbers as we knew them, and moved on. The company itself, however, wanted to talk further.
My work underestimated a few elements of Acorns’ business, namely that its partner work was revenue-positive, and its then-nascent debit card business would also accrete interchange fees. That meant there was more revenue tumbling into Acorns’ accounts than I had figured; the deal as leaked made more sense in the light of our fuller picture of the company.
I say all of that to help underscore Acorns’ ambitions instead of just mocking myself for missing things. Acorns, it appears, want to be more than a savings app. By moving into the debit space, it feels more like a neo-bank with a savings focus than a nifty app to help people save their first few hundred dollars.
And that’s why its new round (the $105 million Series E) is interesting. With so much new capital, Acorns can afford to do quite a lot on the product front; I’m curious how far it will take the banking side of its service, and how much focus the savings element will receive.
Acorns is not alone in working to change banking for younger generations. It’s something we’ve written about on Crunchbase News a few times — this and this, from Gabriela Barkho, are a good start — and a topic I suspect we will continue to cover.
Modern American banking is a system designed for the wealthy and littered with fees so ridiculous that they form a tax on poverty. If Acorns can do better for regular people and perhaps even reach some of the underbanked, it would be good. And the firm now has the money to do pretty much whatever it wants for a few years. We’ll see.
Top Image Credit: Li-Anne Dias.
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