Credit Karma is a popular credit monitoring and financial services company founded in 2007 in San Francisco, California. The company provides free access to credit scores and reports from TransUnion and Equifax. Credit Karma also offers tools to monitor credit, compare financial products like loans and credit cards, file taxes for free, and more. With over 100 million members in the United States, Credit Karma has grown into one of the largest consumer technology companies focused on financial services.
Quick Answer
Credit Karma is owned by Intuit, an American software company headquartered in Mountain View, California. Intuit acquired Credit Karma in 2020 for $7.1 billion in cash and stock. Prior to the acquisition, Credit Karma was an independent private company headquartered in San Francisco, California.
Founding of Credit Karma
Credit Karma was founded in March 2007 by Kenneth Lin, Ryan Graciano, and Nichole Mustard. The three founders had backgrounds in software engineering and recognized the need for a free platform to empower consumers with knowledge about their finances. They launched the first version of Credit Karma in 2008, initially focusing on providing free credit scores and reports from TransUnion.
The founders bootstrapped the company for over three years before raising their first round of venture capital funding in 2011. Some of Credit Karma’s early investors included Ribbit Capital, Susquehanna Growth Equity, and Felicis Ventures. Over the next decade, Credit Karma raised over $868 million in total venture funding and expanded its services significantly.
Growth and Business Model
Credit Karma experienced rapid growth driven by its free tools and resources for monitoring credit. Membership grew from 1 million users in 2010 to over 85 million users by 2019. The company expanded beyond just credit scores to offer comparison tools for credit cards, loans, mortgages, and more. Credit Karma also entered the tax preparation business, allowing users to file their taxes for free.
Credit Karma’s core business model focused on generating revenue through targeted recommendations and advertisements based on members’ credit profiles and financial needs. Credit card, loan, and other financial service providers pay Credit Karma to acquire new customers through its platform. This allows Credit Karma to offer its tools for free while still monetizing its large member base.
Key Milestones
- 2007 – Founded in San Francisco, California
- 2008 – First version of Credit Karma launches
- 2011 – Raises $7.5 million in Series A funding
- 2012 – Launches free credit monitoring services
- 2014 – Reaches 30 million members
- 2016 – Launches auto insurance comparison tool
- 2017 – Launches free tax filing services
- 2019 – Reaches over 100 million members
- 2020 – Acquired by Intuit for $7.1 billion
Acquisition by Intuit
In February 2020, Intuit announced it would acquire Credit Karma for $7.1 billion in cash and stock. Intuit is the creator of popular financial software like TurboTax, QuickBooks, and Mint. The acquisition provided Intuit with Credit Karma’s large consumer financial platform and data capabilities to accelerate its strategy in consumer finance.
Under the terms of the deal, Intuit paid around $3.8 billion in cash and $1 billion in stock upfront. Credit Karma shareholders also received unregistered Intuit shares and contingent bonuses worth up to $1.5 billion. The acquisition closed in December 2020 after receiving regulatory approval.
Credit Karma continues to operate as an independent consumer brand under Intuit’s ownership. Its headquarters remains in San Francisco, and the founders have stayed on to lead the business post-acquisition. Intuit has maintained Credit Karma’s core products while seeking opportunities to use its platform to promote Intuit’s other financial tools.
Key Details of Intuit’s Acquisition of Credit Karma
| Acquiring Company | Intuit Inc. |
|---|---|
| Acquired Company | Credit Karma |
| Industries | Financial technology, Consumer finance |
| Acquisition Price | $7.1 billion |
| Date Announced | February 24, 2020 |
| Date Closed | December 3, 2020 |
About Intuit
Intuit Inc. is an American publicly traded software company headquartered in Mountain View, California. Founded in 1983, Intuit makes financial and tax preparation software for consumers, small businesses, and accounting professionals. Some of Intuit’s major products and services include:
- TurboTax – The #1 best-selling tax preparation software in the U.S.
- QuickBooks – Accounting and bookkeeping software for small businesses
- Mint – A personal finance app for managing money
- Credit Karma – A consumer platform for free credit scores, reports, and financial products
In addition to Credit Karma, some of Intuit’s other major acquisitions have included Mint.com in 2009 and Mailchimp in 2021. The company has over 10,000 employees and reported $9.6 billion in revenue in fiscal 2022. Intuit is listed on the NASDAQ stock exchange and is a component of the S&P 500.
Key Facts About Intuit
| Headquarters | Mountain View, California |
|---|---|
| Founders | Scott Cook, Tom Proulx |
| Founded | 1983 |
| Annual Revenue | $9.6 billion (FY 2022) |
| Employees | ~10,500 (2022) |
| Stock Ticker | INTU |
| Stock Market | NASDAQ |
Impact of the Acquisition
Intuit’s acquisition of Credit Karma for $7.1 billion was one of the largest financial technology deals ever at the time. It underscored the high valuations and demand for disruptive fintech companies offering innovative direct-to-consumer products.
For Intuit, buying Credit Karma provided a major boost to its consumer strategy. Intuit gained access to Credit Karma’s user base of over 100 million members to cross-sell and promote Intuit’s other products related to small business, taxes, and personal finance.
The founders and leadership of Credit Karma have stayed in charge of the business under Intuit’s ownership. Intuit has maintained Credit Karma’s suite of products and does not appear to have changed its operations significantly post-acquisition.
Industry analysts viewed the deal as strategically sound for Intuit. However, some expressed concerns about the high price paid and whether Intuit could successfully integrate such a large acquisition.
Benefits of the Acquisition
- Provided Intuit a major consumer finance platform with 100+ million members
- Diversified Intuit’s business into credit monitoring and financial services
- Gained proprietary data capabilities to personalize financial products
- Opportunity to cross-sell Intuit’s other products to Credit Karma members
- Expanded Intuit’s strategic position in disrupting the consumer finance industry
Risks and Challenges
- High price paid – over 7x Credit Karma’s revenue at the time
- Integrating a large consumer web company into Intuit’s enterprise focus
- Maintaining Credit Karma’s culture and entrepreneurial spirit under new ownership
- Maximizing synergy between Intuit’s products and Credit Karma’s platform
- Regulatory scrutiny of big tech acquisitions
Credit Karma Today
Today, Credit Karma remains one of the most popular financial services platforms for consumers. Under Intuit’s ownership, the company says it has grown to over 130 million members as of 2022.
Credit Karma continues to provide free access to credit scores, credit monitoring, recommendations for credit cards and loans, tax filing services, identity monitoring, and more. The company has launched new products like free checking accounts and high yield savings accounts as well.
Intuit highlights that Credit Karma has tripled its revenue under its ownership. Intuit has maintained Credit Karma’s office in San Francisco and mostly stayed hands-off in its operations. This has allowed Credit Karma to retain its vibrant startup culture even as part of a large public company.
Looking ahead, analysts expect Intuit to continue leveraging the data and learnings from Credit Karma’s platform to develop better financial products. Integration with TurboTax and QuickBooks could also provide opportunities for current Credit Karma members.
Credit Karma’s Products and Services
- Free credit scores and reports
- Credit monitoring and identity theft protection
- Credit card and loan recommendations and applications
- Car and home insurance quotes
- Free tax filing
- Banking services like checking and savings accounts
- Financial product reviews and comparisons
Conclusion
In summary, Credit Karma is owned by Intuit Inc. after being acquired for $7.1 billion in 2020. Prior to that, Credit Karma was an independent private company founded in 2007 and headquartered in San Francisco.
Intuit purchased Credit Karma to accelerate its consumer financial services strategy. The deal provided Intuit with Credit Karma’s 100+ million members and data capabilities. However, Intuit paid a high valuation of over 7x revenue.
Under Intuit’s ownership, Credit Karma has continued to grow and innovate in consumer financial services. Intuit has mostly taken a hands-off approach in managing Credit Karma as a separate brand and business unit. Going forward, Credit Karma is positioned to keep disrupting the financial industry with its popular free tools and products.