M1 Finance Secures $150M Series E Funding - Valuation Soars

M1 Finance Secures $150 Million in Series E Funding

Approximately four months following the announcement of a $75 million Series D funding round, M1 Finance is now reporting a new $150 million Series E investment, spearheaded by SoftBank’s Vision Fund 2.

This financing, which also benefited from contributions from current investors, elevates the Chicago-based fintech company to a valuation of $1.45 billion, achieving unicorn status.

Rapid Funding Growth

This round represents M1’s fourth funding achievement within a period of just over thirteen months.

Since its founding in mid-2015, the total capital raised by the company now exceeds $300 million.

Notable previous investors include Coatue Management, Left Lane Capital, Jump Capital, and Clocktower Technology Ventures.

Founder and CEO Brian Barnes indicated in March that M1 was approaching unicorn status.

Combining Financial Services

The company distinguishes itself by integrating three conventional fintech services – automated investing, borrowing, and banking/spending – into a single platform.

Over the past two years, M1 has experienced substantial growth.

As of its last funding round in early March, the company’s AUM (assets under management) stood at $3.5 billion.

Currently, M1 reports an AUM of $4.5 billion, representing a more than fivefold increase compared to its position eighteen months ago, as stated by Barnes.

The company has more than doubled its user base and tripled its AUM since July 1, 2020.

Platform Mission and Growth

M1 was initially launched to the public in late 2016 with the objective of creating a platform that would empower individuals to manage and grow their finances with both control and automation, offered at no cost.

Further details regarding M1’s revenue model can be found on its official blog.

The company now serves “hundreds of thousands” of customers who utilize its platform for investing, digital checking, or access to portfolio lines of credit.

Pandemic-Driven Expansion

Similar to many other businesses, M1 experienced a surge in activity during the pandemic.

Barnes noted a significant increase in interest in investing, particularly among millennials.

“Lockdown conditions led to reduced spending for many, while uncertainty about the future heightened the desire to build long-term wealth through investment,” Barnes explained to TechCrunch.

“M1 directly benefited from this trend, with our assets under management quadrupling since the pandemic’s onset last March, and a threefold increase in signups in January 2021 compared to the previous month.”

Recent Product Launches

In December of last year, M1 introduced Smart Transfers, enabling “Plus” clients to automate their financial goals based on predetermined rules.

February of this year saw the release of Custodial Accounts, allowing M1 Plus parents or guardians to invest in portfolios for younger family members.

In June, M1 launched Send Check, providing M1 Plus clients with the ability to send physical checks from their M1 Spend Plus checking accounts.

Barnes stated, “We are committed to driving innovation, as demonstrated by our departure from manual trade input and one-size-fits-all portfolios.

Our focus remains on continuous innovation across Invest, Borrow, and Spend, streamlining complex processes.”

SoftBank’s Perspective

Munish Varma, managing partner at SoftBank Investment Advisers, expressed his firm’s belief that M1 is “well-positioned to become a leading financial super-app, consolidating users’ financial lives through its integrated Invest, Spend, and Borrow products.”

The newly acquired capital will be allocated to the development of new products and features, further platform innovation, and expansion of the company’s workforce.

M1 has increased its employee count from 40 at the beginning of 2020 to 250 currently.

As noted by colleague Alex Wilhelm, M1 is not alone in experiencing growth within the savings, investing, and spending sectors.

Robinhood and Public have seen success in the investing arena, while Chime has rapidly scaled in the spending and saving markets.