Startups

Personal Capital sells to Empower Retirement in deal worth up to $1B

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Today Personal Capital, a fintech company that had attracted more than $265 million in private funding, announced that it is selling itself to Empower Retirement, a company that provides retirement services to other companies. The deal is worth $825 million upon closing, with another $175 million in what are described as “planned growth” incentives, according to a release.

The deal is a likely win for Personal Capital. According to Forbes, the firm was worth $660 million around the time of its Series F round of funds, which it raised in February of 2019. The company was valued at around $500 million in December of 2016, meaning that investors who put capital in at that point, or before, likely did well on their investment.

Venture groups who put capital in later, unless they had ratchets in place, likely didn’t make as much from the deal as they originally hoped. Regardless, a $1 billion all-inclusive exit is nothing to scoff at; Facebook once bought Instagram for that much money, and the sheer cheek of the transaction at the time nearly broke the internet.

Saving, not spending, is the new hotness in fintech

During its life as a private company, Crosslink Capital, IGM Financial, Venrock, IVP and Corsair each led rounds into the company according to Crunchbase data.

Personal Capital is a consumer service that helps folks plan for retirement, and invest their capital. The company offers free financial tools, and a higher-cost wealth management option for accounts of at least $100,000. The company doesn’t like being called a robo-advisor, instead claiming to exist in the space between old-fashioned in-person wealth management relationships and fully automated options.

Regardless, the company’s sale price should help market rivals price themselves. Here are Personal Capital’s core stats (data via Personal Capital, accurate as a May 31, 2020):

  • AUM: $12.3 billion
  • Users: 2.5 million

So, Wealthfront and M1 Finance and others, there are some metrics for you to weigh yourselves against. Of course, other, competing companies have different monetization methods, so the comparison won’t be 100% direct.

The Personal Capital exit fits into the theme that TechCrunch has tracked lately, in which savings and investing applications have seen demand surge for their wares. This is a trend not merely in the United States where Personal Capital is based, but also abroad.

Aside from Personal Capital’s exit today, we’ve also seen huge deals in 2020 from Plaid, which sold to Visa for over $5 billion, Galileo’s exit for over $1 billion and Credit Karma’s sale for north of $7 billion. In response to this particular news item, TechCrunch’s Danny Crichton noted that fintech is “probably the hottest exit market right now.” He’s right.

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