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Investment App Startup M1 Finance Raises $150m

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M1 Finance announced today that they have raised $150m in Series E funding. In total, the company has raised over $300m in funding since its inception in 2015, and this latest news brings the company’s evaluation up to $1.45 billion. This was their fourth round of funding in the past 12 months and helped the company solidify its status as a unicorn. SoftBank’s Vision Fund 2 led this round of funding and was joined by several existing investors including Coatue Management, Left Lane Capital, Jump Capital and Clocktower Technology Ventures.  In the news release, founder and CEO Brian Barnes re-emphasized the importance of their user-oriented approach, stating that “financial well-being isn’t a luxury, it’s a necessity. Our platform helps people have more control, more freedom, and more power over their money”

One-Stop Super App

M1 Finance markets itself as a one-stop super-app. Through its mobile application, M1 Finance allows clients to invest, borrow and spend in a single location. By having these features all in one place, users are able to have better control of their finances and automate many payment and investment decision actions with ease. According to M1, this flexibility allows users to have the “perfect mix of personalization and automation”. From low fees for investing to low rates for borrowing, the application has something for just about everyone. The company also recently launched its “M1 Plus” account option, providing lower borrowing rates (2% versus 3.5% for normal accounts), additional trading options (after-hours trading) and more rewards for spending (1% cash back). Another feature announced at the same time was Smart Transfer, which perfectly illustrates the benefits of integration between the three different functions. Through Smart Transfers, rules can be put onto accounts that automate deposits and withdrawals. For example, users can enter the amount of money they need for basic living expenses into the application. The application will ensure your account always has the necessary funds and automatically either invest the extra money in your account or borrow money to ensure you always have the basic living expense minimums. 

The company has grown rapidly over the past 6 years, now boasting hundreds of thousands of users and over $4.5 billion of assets under management (AUM). Much of this growth has occurred over the past year, with the pandemic driving first-time retail investors into the market. The user base has more than doubled in the past year and AUM has almost tripled. 

Looking into the future

As mentioned, this recent news marks the fourth financing round announced by the company in the past 12 months. The money raised so far has already been put to good use. In their previous round of funding in March 2021, the company set a goal of doubling its employee headcount to 300 by the end of 2021. In today’s announcement, M1 Finance has stated that they intend to “focus on delivering an optimal client experience through new products and features, platform innovation, enhanced customer service, and hiring top talent to realize its mission”.

Baggio has been an investor in the technology space for over half a decade. He uses the perspectives gained from his work experience in the private, public, and non-profit sectors to guide his investment strategy, with a specific interest in the potential of emerging disruptive technologies.

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