GoHenry, a UK-based financial education app and pre-paid debit card provider for kids, has expanded into Europe for the first time with the acquisition of French startup Pixpay. The terms of the contract have not been disclosed.
Founded in London in 2012, GoHenry has emerged as one of the preeminent fintech companies for children, targeting children aged six to 18 with a digital platform that allows parents to allocate and control funds while their children learn how to plan and gain insight into their spending habits. GoHenry expanded to the US back in 2018, and today the company has more than two million users in the two markets – it also says that one-sixth of 12-year-olds now have a GoHenry debit card.
Pixpay, for its part, was founded in Paris less than three years ago, and is a similar proposition to GoHenry, but with more of a focus on slightly older children, starting at 10 years old. The company expanded into Spain back in November, helping to boost its membership to nearly 200,000 across the two markets.
GoHenry is going to Europe
In many ways, the Pixpay acquisition serves as an ideal vehicle for GoHenry to expand its horizons. The US has always been its priority after the domestic market until now, and when GoHenry raised $40 million 18 months ago, the message at the time was very much about continued expansion in the UK and US, but GoHenry CEO Alex Živoder told TechCrunch that Europe was never far from his thoughts.
“When we launched in the UK in 2012, we were pioneering a new category in fintech, and so we had to develop an entire category from scratch with no one to learn from before us,” he said. “When we decided we were ready to expand internationally, our timing in Europe was always part of the plan. Our first step was to launch in the US, which we did in early 2018 and experienced triple digit year-over-year growth. After our funding round in December 2020, we were looking for the right opportunity to expand into Europe.”
While GoHenry has largely had to be built from scratch in the US, it’s clear that it’s taking a completely different approach for markets closer to home — and there are many advantages to buying an established brand with power like it did with Pixpay. perhaps chief among them is that GoHenry doesn’t have to deal with recruiting, localization and running campaigns as much. Indeed, GoHenry said it has no plans to integrate the two companies, with their brands, management teams and headquarters remaining as they are.
“As an established leader in teen banking in France and Spain and a trusted brand, the acquisition of Pixpay made perfect sense to help accelerate growth across Europe, improve our competitive advantage and strengthen our global leadership position,” Zivoder said.
However, this does not mean that resources will not be pooled at some point.
“With Pixpay focused exclusively on teenagers and GoHenry catering to children as young as six, this acquisition will allow us to combine our expertise in financial education for the benefit of our members,” Zivoder added.
Show me the money
GoHenry touts strong growth for 2021, claiming its revenue has more than doubled to $42 million, something Zivoder attributes to—you guessed it—the pandemic.
But what exactly is the correlation? Well, while the company’s core offering is essentially a financial management product that helps parents give their children some financial independence, it’s also very much about education. Through GoHenry, kids can learn how to budget, while there are so-called “money missions” that give mini-lessons on all things financial.
Throw into the mix the broader social shift away from cash, a movement that has accelerated in recent years, and GoHenry seems well-placed to capitalize.
“Financial education is a key life skill and a secular trend, period,” Zivoder said. “But during the pandemic, the need to teach kids how to be good with money in a cashless world, compounded by social distancing measures and school closures, is driving more people online, and many store owners still don’t accept cash anymore.”
Acquiring Pixpay makes sense for GoHenry in terms of kick-starting its expansion plans without having to start from scratch in new markets. With this one deal, GoHenry immediately has two more markets under its wing, with two more scheduled for later this year as Pixpay prepares to launch in Italy and Germany.
And from Pixpay’s perspective, it also makes sense, given that GoHenry already has a significant foothold in two major markets and ten times the number of members than Pixpay. Consolidation — rather than competition — makes life easier for both companies.
“It made sense to combine our expertise with that of GoHenry to enhance our growth plans,” Pixpay CEO Benoit Grassin told TechCrunch. “With shared values and ambitions, we believe this combination with GoHenry will allow us to go faster and further than if we had acted alone.”