Aspiration, the upstart banking alternative built around sustainable finance, carbon offsets, and conscious consumerism, has raised $315 million in new funding.
Investors (including us) have been drawn to the company's messaging and mission around creating a more responsible financial services industry that can use everyday spending to mitigate climate change.
Using its Zero credit card, customers pay for Aspiration to plant a tree with each transaction they make. The business also has tools to help customers measure their carbon footprint based on their transaction histories, offers 10% cash back on debit purchases made at socially responsible businesses, and pitches some of the highest annual rates on savings.
Now it has hundreds of millions more in capital ahead of a planned listing on public markets to attract even more customers.
In November, Aspiration marked a milestone of record revenues in its most recent quarterly statement of $27.3 million. That revenue was distributed across consumer financial services, its consumer ESG business and its corporate environmental, social, and corporate governance services. Over half of that revenue came from what the company classified in a statement as "Enterprise ESG Services".
So Aspiration's business is growing. However, that growth didn't come cheaply. Over the same period the company spent tens of millions on marketing and customer acquisition costs more than erasing its revenue gains.
Big financial and technology investors like former Microsoft chief executive Steve Ballmer and funds managed by the private equity firm Oaktree Capital Management weren't deterred by Aspiration's early red ink.
Like us, they believe that the company is poised for continued growth as an early leader in the push for creating a more sustainable financial system, incentivizing environmental stewardship and providing financial services products that do not back the oil and gas industry.
The financing includes $50 million structured as preferred stock drawn by Aspiration that converts into equity at an equivalent price of $11 a share, according to the head of the investment entity that's taking Aspiration public, Ahmed Fattouh, in an interview with Bloomberg. Another $250 million comes in the form of non-convertible perpetual preferred stock which pays an 8% annual dividend and can be redeemed after nine years, Aspiration Chief Executive Officer Andrei Cherny told Bloomberg. The remaining $15 million is a private investment in public equity, or PIPE, to fund upon the deal’s completion.
“Aspiration is a category creator at the intersection of the growing fintech and sustainability industries,” said Brian Laibow, Managing Director and Co-Head of North America for Oaktree's Global Opportunities strategy, in a statement. “We're delighted to partner with the Aspiration team as they continue to scale their growth and impact.”
The end of the year has brought a flurry of dealmaking for the financial services company. In November, the company signed partnerships that will bring its services to international markets. One was with subsidiaries of the Korean financial services giant Hanwha Group to bring its sustainable finance, ESG consulting, and reforestation program to the South Korean market and the other with Qatar and Doha to expand sustainability services to the region.
“Raising significant equity now at a premium to the initial deSPAC valuation, coupled with non-dilutive long-term preferred financing, demonstrates a recognition of Aspiration’s accelerated growth this year,” said Aspiration CEO Andrei Cherny, in a statement. “The switch to sustainability will likely be the largest, fastest shift in behavior in human history and we are proud to welcome the support of such respected investors as we move toward a historic listing to bring sustainability services and ESG-driven financial solutions to the public market.”