The Venture Codex

Participated · Convertible Note · Apr 2014

Cove operates the Mortgage Alternative Program (MAP), which lets customers with a down payment who do not currently qualify for a mortgage move into a home and have up to six years to complete the purchase. MAP is supported by an industry-leading digital marketing, algorithmic lead scoring and underwriting platform that combines multi-channel advertising, robust audience analysis and extended customer relations management capabilities. Proceeds from the recent financings will be used to grow MAP and continue development of Cove’s digital marketing and underwriting platform. The company is using MAP to accumulate a growing portfolio of single-family homes purchased through the program. Cove currently operates in fifteen states and positions itself to power a growing network of partners offering related products and services in real time. The company was established in 2012 and is based in Irvine, California. Cove Financial Group, founded in 2012 and based in Irvine, California, operates a Mortgage Alternative Program (MAP) that enables consumers with a deposit but who do not yet qualify for a traditional mortgage to move into a home while they work to qualify later. MAP is supported by a digital marketing platform that combines multi-channel advertising, audience analysis and extended CRM capabilities to match consumers with financial products and services in real time. MAP is currently offered in California, Arizona, Texas and Washington, with plans to expand to additional states. Cove announced it closed a $10.4 million financing consisting of a Series A Preferred Stock issuance and convertible debt. The transaction was led by an affiliate of Jacobs Asset Management, LLC (JAM), a New York–based money manager. Proceeds will be used to grow MAP and to launch its digital marketing platform; legal advisors included O’Melveny & Myers, Dechert and BuckleySandler, with financial advisory support from Ernst & Young.

Led · Series B · Mar 2014

Acorns is a savings-and-investing app that automatically builds portfolios and offers products spanning investing, debt management, retirement, and a children-focused product called Acorns Early. The company plans to roll out customized portfolios, optional limited crypto exposure (no more than 5%) and expanded family-specific offerings in 2022. Acorns says it will not offer crypto trading on the platform; crypto will be an uncorrelated allocation option within diversified portfolios. Management intends to use the new funding to pursue acquisitions, fund growth and innovation, and scale product development. Financially, Acorns reports more than 4.6 million paid subscribers and said it exceeded its public forecast for 2021; its SPAC deck projected $126 million in revenue for 2021. The deck also showed revenue rising from $44 million in 2019 to $71 million in 2020, gross margin improving from 71% to 78%, and expected 2021 operating income and cash flow to worsen (operating income to -$85M; operating cash flow to -$70M). Acorns operates a financial-wellness program designed to encourage Americans to save and invest, including family-focused offerings such as Acorns Early. The company announced a strategic investment from Dwayne 'The Rock' Johnson and Dany Garcia, co-founders of Seven Bucks Companies; the size of the investment was not disclosed. As part of the partnership Acorns said it will run several programs to encourage families to start early and invest. One promotion tied to the partnership will invest $7 in each Acorns Early account opened by qualifying families. The article does not disclose operating metrics, revenue, or prior funding rounds. Acorns is based in Irvine. Acorns offers a micro‑investing app that rounds up debit and credit purchases and invests the spare change into index funds. Its core products include automated spare‑change investing, an automated retirement account called Acorns Later, and Acorns Spend (a checking account and debit card). The company has about 4.5 million users and manages over $1.2 billion in assets. Acorns Later has over 350,000 users who have invested roughly $40 million through the product. CEO Noah Kerner said the company will partner with CNBC to produce original content targeted at less financially savvy audiences. As part of that partnership NBCUniversal became the largest shareholder and will take a board seat. Acorns operates a mobile savings and investment service that rounds up purchases to the nearest dollar and invests the difference in exchange-traded funds it manages. The company has grown to more than 2 million investment accounts, with 600,000 opened in 2017, and is on track to execute 1 billion trades in 2017 through its proprietary broker-dealer. More than 50 percent of customers use the recurring investment feature, which the company views as a path to higher balances. Acorns charges $1 per month for accounts with balances under $5,000 and 0.25% per year for accounts over $5,000. With new capital the company is exploring potential acquisitions and focusing on personalization and responsible-spending features. Acorns is also expanding its team with senior hires including Gahl Berkooz as chief data officer, Jike Chong, and former BlackRock CIO Chris Jones. Acorns automates small-dollar investing by rounding up users' purchases and investing the remainder into diversified portfolios of stocks and bonds. Users sync credit or debit cards with the app for automatic, recurring contributions. The product targets millennials, with about 75% of users aged 18–34, and the company reports 850,000 investment accounts. Fees are $1 per month for accounts under $5,000 and 0.25% per year for larger accounts. Incoming CEO Noah Kerner emphasizes micro‑investing as a way for young people to grow accounts through many small sources. The company, based in Irvine, California, was started by father-and-son founders Walter and Jeff Cruttenden; Jeff says the firm’s portfolios have outperformed the S&P on a risk-adjusted basis and calls Acorns “the fastest growing investment app ever.”