Chicago fintech startup M1 Finance, which is giving people a new way to invest their money, has spent much of the pandemic fundraising and recently closed on a Series B round.
The startup announced on Tuesday that it raised $33 million from investors such as Left Lane Capital, Jump Capital, Clocktower Technology Ventures and other existing M1 Finance backers.
To date, the startup has raised more than $54 million, said M1 Finance founder and CEO Brian Barnes.
The new financing will be used for product development, marketing and hiring. The company expects to add about 15 employees across product development, operations and marketing, Barnes said.
M1 Finance has created a no-fee investing app that offers users an automated brokerage, portfolio lines of credit and digital banking. In February, the startup reached $1 billion in assets being managed on its platform. So far in 2020, M1 Finance has added more than $650 million in customer deposits.
“We’ve seen a significant uptick in new accounts, in existing accounts adding more money, and the like,” Barnes said. “We’ve grown a ton throughout all this market turmoil.”
Increased usership could be explained by the fact that when the stock market drops significantly, like it did in March, many people see it as a buying opportunity to acquire stock shares at low prices. Additionally, during a bad economy, more people are reassessing their finances and how they should save and invest their money.
Though M1 Finance is growing quickly and says it is doing so with less venture capital than some of its fintech peers, the startup is not yet profitable. Barnes said M1 would break even after managing about $3 billion on the platform.
“We have some growth and scaling to do,” Barnes said. “But for us, it’s all about investing in the future growth to create a very large, durable and sustainable financial institution."
Barnes began fundraising for this latest round of funding in February and officially closed it at the end May. Though M1 Finance was fundraising during the pandemic, Barnes said raising the round wasn’t in direct response to Covid-19 or any financial challenges the virus presented the company. He said M1 Finance always planned to raise a Series B round this year.
“With great traction and growth in 2020, despite Covid and the market turmoil, the round came together actually sooner than we anticipated,” said Barnes.
M1 Finance, which now employs 65 people, took nearly all of its fundraising meetings digitally.
“The toughest thing was inability to meet face to face,” Barnes said. “The vast majority of interactions did have to happen via Zoom, via phone call and the like. It’s crazy how this would have been far more difficult a couple years ago.”
