Kin Insurance was poised to merge with Omnichannel Acquisition Corp., a special purpose acquisition company, to go public. However, in January, the company decided not to move ahead with the deal and, last week, said it raised $82 million in a Series D round of funding. “We intent to introduce our share rewards program that will allow eligible customers to own a piece of the company and an even greater piece as they invite others to start the path toward financial wellness,” Acorns CEO Noah Kerner said.
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Is the investing world ready for yet another next-generation fintech going public? Acorns, an investing app that offers a suite of investment, banking, and financial education services for low monthly fees, revealed it’s going public by combining with an existing company, Pioneer Merger Corp. (PACX). The company said this places the equity value of its business at roughly $2.2 billion.
- Its stock should trade on the Nasdaq under the ticker symbol OAKS.
- Acorns, the investing app Ashton Kutcher is obsessed with, announced plans to go public via SPAC yesterday in a deal valued at $2+ billion.
- After fintech Bolt surprised the industry with a leaked term sheet that revealed it is trying to raise at a $14 billion valuation, things got weird.
- From 2019 to 2020, Acorns grew 61% from $44 million in revenue to $71 million.
The company, last valued at less than $1 billion, has attracted venture investments from the likes of PayPal Ventures, BlackRock, Ashton Kutcher, Jennifer Lopez, and xcritical reviews Dwayne Johnson. This is a 2021 number, so it’s only partially earned, but the extreme bias in Acorns’ business toward SaaS incomes was a surprise. Acorns has long had a larger savings focus than spending focus, perhaps limiting its interchange incomes.
That 61% growth number, in the abstract, is not that impressive for a venture-backed startup in a growth market at a sub-$100 million revenue scale. By now this is old news, but we haven’t had a clear picture of the economics of consumer fintech startups accelerated by the pandemic. Now that Acorns has decided to list via a SPAC — more on that in a moment — we do. The announcement of the raise comes about six weeks after the consumer fintech startup said it was shelving its plans for its $2.2 billion SPAC with Pioneer Merger Corp. in favor of an eventual traditional IPO. New York-based Acorns had last raised more than three years ago — a $105 million Series E round in January of 2019 at an $860 million valuation.
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It remains subject to approval by the latter company’s shareholders. Acorns said the deal should close in xcritical the second half of this year. In its press release trumpeting the move, Acorns quoted Kerner as saying that, “Going public will help elevate our story, introduce many more people to the power of compounding and financial wellness, and bring financial literacy to the mainstream.” According to a report from Pulse 2.0, institutional investors include Wellington Management, Senator, Declaration Partners, Greycroft, The Rise Fund, TPG’s global impact investing platform. After 2021, things get mostly better, according to Acorns’ estimates.
Consumer Savings App Acorns To Go Public Via SPAC At $2.2B Valuation
Operating income is expected to improve in 2022, along with the company’s cash burn essentially flattening out in gross-dollar terms. Because Acorns anticipates having around $400 million in cash at that point, all things should pencil out for the company under its own timeline. So its near-term losses over the next few years are not so scary. But if you observe the company’s 2019 growth rate, you’ll note that Acorns’ pace of revenue expansion has accelerated from 54% in 2019 to 61% in 2020. And the company anticipates that it can scale that figure to 77% this year.
And following the transaction, the company will have significant capital flexibility for continued organic and inorganic growth. And existing Acorns equity holders, including management, will become the majority owners of the company. Launched as of the end of 2014, Acorns grew rapidly to help everyday Americans responsibly manage their money for the long term. And Acorns combines education, investing, banking, and earning into a cohesive experience that puts the tools of wealth-making in everyone’s hands. We’re way over our word count this morning, so let’s pause here. The Acorns SPAC deck makes it clear that consumer SaaS in the fintech world is possible and attractive.
Acorns, the investing app Ashton Kutcher is obsessed with, announced plans to go public via SPAC yesterday in a deal valued at $2+ billion. As part of the SPAC merger, several insiders plan to contribute a share of their personal ownership in Acorns to fund a program giving shares to eligible customers. Acorns, the personal finance app that automates investments and allows its users to invest spare change from daily transactions into the stock market, is going public. Other fintech startups that have agreed in recent months to multibillion-dollar deals with SPACs include banking startup Social Finance, real-estate platform Better Holdco, and trading app eToro Group. In the meantime, Acorns has raised money to continue to explore more acquisitions — it acquired two companies in the first half of last year — as well as to fund “growth and innovation,” Kerner said.
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From the looks of things, companies in the category — including Agility Robotics and Formlogic — can’t hire quickly enough. After two years of building the company, the company quietly launched its beta in June and is officially announcing it today, right here, in TechCrunch. Presently, Acorns has about 700 employees and will continue scaling up, particularly in product development, Kerner said. In 2022, Acorns plans to roll out customized portfolios, the ability to add crypto exposure “to a diversified portfolio” and more family-specific offerings.
Institutional investors who are behind the SPAC merger include Wellington Management, TPG, and funds and accounts managed by BlackRock. Acorns said that Kerner and Pioneer Merger’s sponsor aim to pass along 10% of their respective positions in the new company to eligible customers through a share-ownership program. Proponents said it was a cheaper, more efficient alternative to guiding an existing business through the regulatory hoops of an IPO. While the excitement over SPACs has since waned, the Acorns deal shows there is still interest in the markets. The so-called blank-check companies are investment vehicles and do not have actual operations.
Current Acorns CEO Noah Kerner will also be at the helm of the new company. Something nice this morning is that the Acorns SPAC deck is not a hot pile of horseshit. Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.
Acorns fits inside the larger savings-and-investing boom seen over the last four or five quarters as consumers buffeted by the economic changes brought on by COVID-19 turned to stashing cash and boosting their equities investing cadence. The move is an effort to squeeze additional revenue from second-hand products, over concerns that cheaper, slightly used bikes, treadmills and rowers could cannibalize used sales. After fintech Bolt surprised the industry with a leaked term sheet that revealed it is trying to raise at a $14 billion valuation, things got weird.
Let’s see what the public markets think of paying roughly 17x Acorns’ anticipated 2021 revenue for shares in its business. That’s why I’m trying to treat the company not as if it is a fully mature business. What we care about most is Acorns’ growth (medium-good, accelerating) and revenue quality (good, improving). Things like near-term operating losses are not that worrisome when a company has around a half-billion in cash with which to fund its own growth, as Acorns will when the deal closes. Today it’s Acorns, a consumer fintech service that blends saving and investing into a freemium product. It’s a company that TechCrunch has covered extensively since its birth, including through the pandemic’s impact on its business, both good and bad.
As part of the transaction, xcritical reviews Pioneer will contribute about $400 million in cash, with another $165 million coming from a related private placement involving funds managed by BlackRock, Wellington Management, and other investors. When the deal is finalized, Acorns will trade on the Nasdaq under the symbols OAKS. If Robinhood is your cool cousin who made $50k on her GameStop stock, Acorns is your quiet uncle who owns a profitable pet food business in the suburbs. Acorns doesn’t allow its 6.8+ million users to buy or sell individual stocks.
