M1 Finance raises another round of funding after raising its assets under management to over $ 3.5 billion – TechCrunch

Month after raise a Series C worth $ 45 million, based in Chicago M1 Finance today announced a new round table. A Series D, the new $ 75 million investment was led by Coatue, with two previous investors – Left Lane Capital and Clocktower Technology Ventures – also participating.

The new funding comes after M1 raised twice in 2020, including the aforementioned C Series and a smaller $ 33 million Series B.

While rapid fundraising has become increasingly common in recent years, M1 Finance’s recent capital increase remains remarkable for its pace and scale. And because the company has been relatively free with both growth metrics and notes on its long-term business model, TechCrunch has been able to keep tabs on its expansion in recent quarters.

Growth of M1 Finance

In February 2020, M1 announced it had hit the $ 1 billion mark in assets under management (AUM) after starting the year at $ 800 million. At the time, the company’s CEO Brian Barnes told TechCrunch that his company aimed to generate revenue of around 1% of assets under management from consumers. This kept track of the speed at which the startup increased its revenue as it increased its asset base.

In June 2020, the company announced its Series B and a new AUM milestone: $ 1.45 billion. It was something akin to 50% growth in less than six months. Not bad.

When M1 Finance lifted its Series C later that year, it had $ 2 billion in assets under management. This was double his total from the previous year, and it was big enough to get our attention even more. Then in January 2021, the company announced $ 3 billion in assets under management.

As you can quickly calculate, 1% of $ 3 billion is $ 30 million in annual revenue, provided M1 meets its revenue targets. Today, as part of its Series D, the company announced it has reached $ 3.5 billion in assets under management.

How did she manage such rapid growth, adding $ 500 million in assets under management in just a few months? According to Barnes, in part because of an expanding product mix. The startup added a cash management product at the start of 2019. This service has reached hundreds of millions of dollars in assets, the CEO said. The company’s debt product has also grown rapidly, quadrupling as a percentage of assets last year, he added.

The expansion of AUMs is also due in part to the company’s user base. Barnes told TechCrunch his company has about 500,000 funded accounts, a growing number that has helped word of mouth marketing in recent quarters. And, finally, the growth in assets under management came from cohorts of existing users adding more capital to their M1 accounts over time, the CEO said.

Of course, the business is not the only service in the savings, investment and spending spaces that has seen growth over the past year. Robinhood and public did of course the investment side of things, and Chime has scaled quickly in the spending and savings markets.

What awaits us

M1 has more money than ever after this round, with its CEO telling TechCrunch that he has no plans to raise any new capital and that his company has barely touched its Series B while its entire C series is untapped. But now, with a new fundraiser, M1 may be able to increase their ad spend to help maintain strong user growth; and the extra capital won’t hurt when it comes to competing against even better-funded rivals who also want to build great consumer fintech apps.

We will check with M1 Finance when it reaches $ 10 billion in assets under management. Its CEO believes the company could reach billions in double-digit assets under management by the end of the year, or early 2022. Let’s see how quickly it reaches that next milestone.