GoHenry, the neobank for children aged six and up, has tapped existing investors Edison Partners and Revaia for $55m in Series B funding, after its losses shot up by almost 2000% in 2021. Italian payments giant Nexi has also taken a stake in the neobank, joining as an investor in the latest round.
GoHenry benefitted somewhat from the pandemic cashless boom, increasing its revenue 55% in 2021 to £30.5m, up from £19.7m in 2020. But in an interview with Sifted, CEO Alex Zivoder warns that 2022 revenue figures will be “far less than that”, as the company has since slowed down revenue growth to focus on profitability.
It’s a goal that seems a long way off. As with all neobanks, customer acquisition has been an expensive pursuit for GoHenry — which, coupled with a 73% growth in headcount since its Series A, has kept it miles away from profitability so far. In 2021, the neobank’s losses shot up 20x to £30.5m, from £1.5m in 2020.
"This was from reinvesting in the business as we pursued revenue growth over profitability," Zivoder says, attributing the losses to launching new products like the bank's Junior ISA; hiring new employees; and expanding its customer base in the US and UK .
Despite these vast losses and talk of distant profitability, there’s no sign that GoHenry is slowing down its expansion plans.
Four years after launching in the US, London-based GoHenry has set its sights on conquering Europe. It made its first entry into the market in July, after acquiring French rival PixPay to move into France and Spain. It’s kept PixPay as the name for its European brand, and now plans to draw on new Italian investor Nexi’s expertise to launch it in Italy before the end of the year.
Nexi has its own payments app catering to Gen Z and millennials, YAP, which currently has around 1m users. Edoardo Giorgetti, head of YAP at Nexi Group, is joining GoHenry’s board after the raise.
“We both believe in the transition to a cashless society and understood the way to do this is by approaching the next generation with digital financial products,” Zivoder tells Sifted.
“We’ll decide what exactly the YAP-GoHenry partnership looks like next year.”
Customer acquisition challenges
GoHenry raised a $40m Series A in December 2020 to expand in the US and UK. Zivoder won’t share any region-specific customer numbers, but does say that the majority of the 2m customers the bank has accumulated since launching in 2012 are based in the UK.
Its main competitor — Revolut <18 (previously Revolut Junior) — has clocked up 1.8m customers since launching in 2020, based across several countries including the UK, Romania and Germany.
But Zidover believes the company’s main competitor is cash.
“We’ve learned a lot from the very competitive and challenging market that is the US,” Zivoder says. “And now we take that knowledge back with us to grow faster in Europe.
“I’m not saying that we won’t spend money in the UK or the US, but right now for us it makes most sense to double down on Europe as our third pillar of growth.”
Beyond Italy, Germany and the Nordics are potentially on the cards further down the line.
“Germany has always been the most difficult market for any of these B2C [business to consumer] brands to get into,” Zivoder says. “So it’s all about timing with that one.”
Amy O’Brien is Sifted’s fintech reporter. She authors Sifted’s fintech newsletter and tweets from @Amy_EOBrien.
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