Sacramento fintech company Acorn Finance has raised $8.4 million in a funding round led by Boston-based MassMutual Ventures, a new investor.
Acorn will use the money to double its staff from 20 to 40, and to continue to upgrade its technology, said CEO and founder Giri Addanki.
Particularly, Addanki said he wants to make it easier and faster to onboard new lenders to the platform, a process that can take a couple of months. He wants to cut that in half. He also plans to cut the time it takes to onboard contractors from two weeks to one week. And, finally, the company will upgrade its algorithms to filter out the best lender fit for the consumer and loan size.
The Acorn app allows contractors to make more money by getting nearly instant financing for home improvement loans. Using Acorn costs them nothing, so they are motivated to use it, Addanki said. Lenders pay an origination fee on loans they close.
The platform can show a path to financing in seconds because it accesses pre-qualified offers from a network of lenders, ranging from other fintechs to finance companies, said Addanki.
The company will now expand from its roster of mostly finance companies to also serve banks and credit unions, he said. Acorn started out with finance companies and fintechs because they tend to have better technology, and more willingness to use it, than traditional banks and credit unions, he said.
Other investors in this round of venture capital include Chicago-based Moderne Ventures. Investors from previous rounds who also invested in this round included Massachusetts-based Vestigo Ventures LLC, Boston-based venture firm Accomplice and New York property technology investment firm MetaProp. A prior $4 million raised in seed financing brings the company’s total funding to $12.4 million, Addanki said.
Addanki declined to disclose Acorn's revenue, but he said it grew 800% from 2020 to 2021. The company also doubled the number of lenders it has, from six to 13 last year.
“The investors like our momentum,” Addanki said.
Eric Emmons, managing director of MassMutual Ventures, will join Acorn Finance’s board of directors.
“Acorn’s embedded lending marketplace increases consumer choice while improving proposal ticket size and conversion rates,” said Emmons, in a news release. “The team’s outstanding combination of vertical-specific expertise and consumer credit allows them to deliver a unique solution for small and medium businesses and service businesses.”
MassMutual Ventures is the venture investment group of Massachusetts Mutual Life Insurance Co. of Springfield, Massachusetts.
Michael Nugent, managing director of Vestigo Ventures, has been on Acorn’s board since 2019. Addanki founded Acorn in 2018.
Acorn can offer loans for as little as $500 and as much as $500,000, so it can finance expenses as small as replacing a stove to as large as building an accessory dwelling unit, adding a pool or replacing a roof. Acorn doesn’t do the lending; its lending partners provide the loans.
Correction: An earlier version of this story misstated the period in which Acorn Finance's revenue grew 800%.
An earlier version of this story misstated the period in which Acorn Finance's revenue grew 800%.
