Investing app Acorns taps 'choppy' private markets at $1.9 billion valuation after scrapping SPAC

cnbc.com:

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.

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