Acorns, the fintech start-up that scrapped plans to go public in January, has raised $300 million from private investors, CNBC has learned.
The savings and investing app is now valued at $1.9 billion after the transaction, more than double its last private round valuation, according to Acorns CEO Noah Kerner. The Series F round was led by private equity firm TPG and included BlackRock, Bain Capital Ventures, Galaxy Digital, and the investment firm co-founded by Brooklyn Nets star Kevin Durant.
The move shows that ample funding is still available for late-stage start-ups with good prospects. Private investors have grown more discerning after a stock market rout for high growth names like PayPal and Block started late last year. Venture capital firms could point to newly-depressed shares of successful public companies and demand a haircut on valuations or even pull deals altogether.
“The markets got very volatile,” Kerner said this week in an interview. “The concerns we had about the [SPAC] market were that we would get lumped into a group of companies that perhaps were valuing themselves in inflated ways.”
That dynamic bled over into the market for newly-listed tech companies, leading to a wave of scuttled transactions. While Acorns’ $1.9 billion private valuation is below the $2.2 billion target when it announced plans to merge with a publicly-traded special purpose acquisition company, or SPAC, that’s because the firm would’ve raised more capital via the SPAC, Kerner said.
The start-up was valued at $1.5 billion on a pre-money basis — an industry term referring to a company’s valuation before it receives external funding — in the scuttled SPAC. That figure climbed to $1.6 billion in the private round, he said.
“One of the reasons we’re proud of the valuation and the amount of capital we raised is because the private markets are choppy now,” Kerner said. “Private investors are taking a long, hard look at the companies they invest in. They’re taking a long, hard look at valuations. I’ve had conversations where private market investors were cutting valuations in half.”
