Acorns acquires child-focused fintech GoHenry to expand in Europe

LONDON – US micro-investment platform Acorns has acquired GoHenry, a digital banking start-up focused on educating children about money, for an undisclosed sum.

The company exclusively told CNBC that it agreed to a deal with GoHenry that will make the firm a wholly-owned subsidiary of Acorns, with employees and supporters of GoHenry rolling over their equity.

Founded in 2012, GoHenry offers a spending card for children aged six to 18, linked to an accompanying money management app. Parents can track their children’s transactions in real time and set spending limits or savings targets.

The timing of the agreement is remarkable. The fintech sector is experiencing a tough environment characterized by high inflation and rising interest rates. There are mixed feelings around the market, with many listed companies’ share prices falling. This, in turn, has had a knock-on effect for privately held fintechs, with many late-stage companies seeing valuations plummet.

However, Noah Kerner, CEO and co-founder of Acorns, insisted that market conditions had no impact on the timing of the acquisition, with talks between the two companies starting as early as 2021.

Acorns’ interest in the financial well-being of families “goes back many years,” he said, starting in 2020 with the launch of Acorns Early – an investment account for children.

Acorns looked at more than 100 deals globally before landing on GoHenry, Kerner said, adding a $55 million cash infusion to GoHenry last year and the acquisition of rival firm PixPay in France made the deal more attractive.

“We pioneered kids and teens with GoHenry, and Acorns really pioneered investing and saving and bringing mental wellness to the future, to everyday America,” Louise Hill, co-founder and chief operating officer of GoHenry, told CNBC in an interview.

“But both of us had ambitions to extend beyond that in terms of customer demographics, so we could start serving people throughout their entire lifecycle, through all life stages.”

Instead of offering a free service and making money from brokerage 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 investments, allowing customers to automatically invest reserve weight from card payments into index funds.

Acorns also charges a monthly subscription fee. The company said it now has a total of 6 million subscribers after acquiring GoHenry.

Despite this, Acorns’ acquisition of GoHenry signals a major growth investment for the company, which until now has only been available in the US. By buying GoHenry, it will now gain access to Europe, a market that is less advanced when it comes to retail investment.

GoHenry has operations in the UK, France, Spain and the USA. In the US, GoHenry’s app will be renamed GoHenry by Acorns. GoHenry will continue to be called GoHenry in the UK, while the 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 transaction, but Kerner said it represented a good deal for GoHenry and its shareholders.

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

It is unclear what the company’s latest valuation is after the GoHenry deal.

Prior to the Acorns acquisition, 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 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 has also struggled to book profits, posting a loss of £30.9 million ($38 million) on £30.6 million of revenue in 2021, according to a Companies House filing. Acorns is also losing money, but Kerner said the goal is to become a profitable company.

SEE: Why retail investment has taken off in the US – but not Europe