Acorns acquires kid-focused fintech GoHenry to expand in Europe

LONDON — American micro-investment platform Acorns has acquired GoHenry, a digital banking startup focused on educating children about money, for an undisclosed amount.

The company told CNBC exclusively that it has agreed to an all-stock transaction with GoHenry. The deal would make the company a wholly owned subsidiary of his Acorns, with GoHenry employees and supporters taking over the stake.

Founded in 2012, GoHenry offers spending cards for kids ages 6 to 18, linked to an accompanying money management app. Parents can track their children’s transactions in real time and set spending limits and savings goals.

The timing of the deal is noteworthy. The fintech sector has endured a challenging environment characterized by high inflation and rising interest rates. Shares of many publicly traded companies have fallen, and market sentiment has deteriorated. This, in turn, has had ripple effects in private fintechs, with many late-stage companies’ valuations plummeting.

However, Acorns CEO and co-founder Noah Kerner has argued that market conditions will not affect the timing of the acquisition, as negotiations between the companies will begin in 2021.

Acorns has been interested in the financial well-being of families “for many years,” he said, launching an investment account for children called Acorns Early in 2020.

Acorns considered more than 100 deals worldwide before landing on GoHenry, adding a $55 million cash injection to GoHenry last year and acquiring French rival PixPay, making the deal even more attractive. It worked, Kerner said.

“We pioneered children and teens at GoHenry, and Acorns is very pioneering in investing, saving, and bringing mental health to up-and-coming, everyday America,” GoHenry co-founder Louise Hill, Chief Operating Officer and Chief Operating Officer, said in an interview with CNBC.

“But we both had the ambition to expand beyond that in terms of customer demographics and be able to serve people through the entire lifecycle, all life stages.”

GoHenry charges parents monthly subscriptions rather than offering a free service and making money on interchange fees.

Acorns, on the other hand, is focused on investing, allowing customers to automatically invest their card-paid change into index funds.

Acorns also charges a monthly subscription fee. In total, he has 6 million subscribers after the GoHenry acquisition, according to the company.

Nonetheless, Acorns’ acquisition of GoHenry represents a major growth bet for the company, which was previously only available in the US. to retail investment.

GoHenry has operations in the UK, France, Spain and the US. In the US, GoHenry’s app will be renamed GoHenry by Acorns. GoHenry remains the same in France and Spain where he is known as PixPay, although in the UK he remains GoHenry.

Kerner and Hill declined to comment on the transaction price, but Kerner said it’s a good deal for GoHenry and its shareholders.

Acorns was valued at $1.9 billion in a $300 million funding round last year after scrapping plans to go public through a merger with a special purpose acquisition company or SPAC due to volatile market conditions.

The company’s latest valuation after the deal with GoHenry is unknown.

Prior to its acquisition 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 has faced stiff competition from rivals that offer their own children’s services, including Revolut, which opened its own children’s account in 2020, and banks such as NatWest.

Gohenry has also struggled to turn a profit, posting a £30.9m ($38m) loss in 2021 on a profit of £30.6m, according to filings with Companies House. Acorns is also losing money, but Kerner said the company’s goal is to become a profitable company.

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