The new money puts the company’s valuation at nearly $1.45 billion. It’s the ninth Chicago venture-backed company this year to reach a valuation of $1 billion or more, or “unicorn” status. SoftBank previously invested in ShipBob, which recently became a unicorn.
The deal is the latest in a string of “mega-round” financings over $100 million that are fueling a massive surge in venture-capital investment in Chicago.
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M1 has seen explosive growth in the past year. The number of accounts has skyrocketed from just over 100,000 a year ago to nearly 500,000, while assets have grown about $4.5 billion, up from $1.5 billion. Headcount has tripled to 265 since the end of 2020, and CEO Brian Barnes expects to have 500 employees by the end of next year.
The company is riding the wave of online investing, which got a boost during the coronavirus pandemic that left a lot of people at home with time and money to invest. M1 is growing fast by attracting more affluent millennial investors, and its existing investors are gradually bringing more money to their accounts.
Digital investing for the masses is a hot space. The popular trading app Robinhood is preparing to go public and could be valued at as much as $40 billion. Chicago-based Tastytrade, a trading and education platform aimed at individual options traders, was acquired this year by London-based IG Group for $1 billion.
Barnes says, “We want to create the next-generation brokerage-bank combined entity, the 2020s version of Charles Schwab.”
Barnes—M1’s founder, whose late mother, Brenda, was CEO of Sara Lee—admits it’s a stretch goal. “We need to get to tens of millions of customers and hundreds of billions in assets,” he says.
The company has added checking and borrowing to its investment app. Unlike Robinhood, M1 doesn’t clear its own trades, so the company hasn’t had to pile up a lot of capital as collateral. He says the company “barely touched our Series C money” raised last year and will have about $250 million on its balance sheet. Barnes says the company plans to add more products but declines to provide specific details. “We do plan on moving into the more regulated financial-services space where we will be able to use a stronger balance sheet.”
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