What Startups Can Learn From LearnVest’s $250 Million Acquisition
TECHCRUNCH: When LearnVest, one of the hottest startups in fintech, announced its acquisition by Northwestern Mutual, the $250 million deal raised some eyebrows. While this partnership may seem unlikely at first, it actually makes a lot of sense for both parties.
LearnVest launched in 2009 as a financial planning service for women. It has since expanded as a platform that connects both women and men with human financial advisers, amassing 1.5 millionusers and tens of thousands of paid subscribers. The startup raised $75 million in venture capital, with Northwestern Mutual investing in its most recent round.
LearnVest is a prime example of the boom going on right now in the financial technology services space. According to CB Insights, more than $1 billion has been invested in financial startups in the past three years, and investment in fintech companies has grown four times faster than venture investing overall.
Since 2008, global investment in fintech ventures has tripled to nearly $3 billion and global fintech investment will more than double by 2018. The acquisitions market is thriving as well. Intuit acquired bill pay app Check for $360 million last May and budgeting platform Mint.com for $170 million back in 2009. Last February, Spanish bank BBVA snagged online-only Simple bank for $117 million. More recently, Capital One bought budgeting app Level for an undisclosed amount.
The success of LearnVest and other fintech startups provides a number of valuable lessons for young companies in any sector. To start, LearnVest picked a pain point that really needed a solution. Americans are drowning in debt. U.S. consumers owe $11.52 trillion to lenders and creditors. An astonishing one in three American adults with a credit history are delinquent on their debt and the average family has $7,630 in revolving debt.
Savings statistics for most Americans are bleak, as well. The balance of the average American family’s savings account is $3,800 and 56 percent of Americans do not have rainy-day savings to cover three months of unanticipated financial emergencies. One in four American families has no savings at all. More than 90 percent of working households do not meet conservative retirement savings targets for their age and income.
Helping Americans stay out of debt, save money and achieve their financial goals are pervasive and high priority needs, and LearnVest came up with a simple approach to addressing them. The startup built tools to help people make better financial decisions and gain more control over their fiscal lives in a way that was more cost-effective and accessible than traditional financial planners. LearnVest identified clear pain points and a target audience that needed a way to solve them.
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