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NerdWallet: Financial Empowerment? Turn to the Nerds

By Tom Loverro, Jules Maltz, Eric Liaw and Cack Wilhelm

We’re thrilled to congratulate Co-Founder & CEO, Tim Chen and Co-Founder, Jake Gibson, and the entire team of Nerds at NerdWallet (Nasdaq: NRDS) on a successful IPO. NerdWallet is a platform that empowers consumers by providing clarity for all of life’s financial decisions. Since we first invested in 2015, NerdWallet has grown dramatically and is now one of the largest and most important resources for personal and small business financial information and education, reaching an average of 20 million monthly unique users and delivering $280 million of revenue through September of 2021.

NerdWallet was a bootstrapped company when IVP invested. Tim had founded the company in the depths of the Great Financial Crisis in 2009, in his apartment in Manhattan with just $800 of capital. No, not $800,000. $800. Fast-forward several years to late 2014, and Tim had created a vibrant, fast-growing and profitable business without the help of outside capital. But Tim’s vision for NerdWallet was much greater than creating a profitable and successful company; the mission was to provide clarity and to educate as many consumers and small businesses as possible with the best, clearest information possible and that required human and financial capital. IVP led NerdWallet’s Series A in January 2015.

We first met Tim years before we invested in NerdWallet. It is truly remarkable that the insights he provided in those very first meetings are as true today as when he first shared them. Tim observed that in the long-run customers would reward whomever provided them the best advice and recommendations. However, most resources available to consumers prioritized short-term monetization and thus compromised the best interests of consumers. Being consumer-first meant providing consumers with the best advice rather than trying to monetize them at every turn. And thus was born one of the most interesting Risk Factors you’ll ever read in a Prospectus.

We may make decisions based on the best interests of our users in order to build long-term trust that may result in us forgoing short-term gains. One of our fundamental values is to build our business by making decisions based upon the best interests of our users, which we believe has been essential to our success in building user trust in our platform and increasing our user growth rate and engagement. We believe this best serves the long-term interests of our company and our stockholders. In the past, we have forgone, and we may in the future continue to forgo, certain expansion or short-term revenue opportunities that we do not believe are in the best interests of our platform and our users, even if such decisions adversely affect our results of operations in the short term. For example, we do not use impression-based advertising on our platform (i.e., where payment is based on digital views or engagement); we publish editorial content on topics that do not generate revenue for us, and our editorial team maintains editorial independence from our business teams. Reviews and ratings of financial services products are neither influenced by whether a product is offered on our platform nor by the pricing we may have with a financial services partner. However, this strategy of focusing on building long-term trust instead of short-term revenue opportunities may not result in the long-term benefits that we expect, in which case our user traffic and engagement, business, financial condition and results of operations could be harmed.

It may be a “risk”, but it is also why we invested in Tim and NerdWallet.

Tim’s hypothesis that being consumer-first would win the day turned out to be spot on. It was correct in credit cards-the company’s first vertical-and it turned out to be correct in every other vertical the company pursued as well. Today, NerdWallet is a single source of truth for consumers and small businesses, encompassing credit cards, personal loans, mortgages, insurance, student loans, banking, small business loans, investing, travel and shopping in the US and now abroad as well. But NerdWallet’s mission won’t be complete with expanding categories, countries or even completing an IPO. Tim’s mission is to empower as many people as possible with financial knowledge and there’s nothing short-term about that.

NerdWallet is IVP’s 127th portfolio company to list publicly and its 12th in 2021.

The comments expressed above are not a statement on NerdWallet’s behalf. Tom Loverro, Jules Maltz, Eric Liaw and Cack Wilhelm are investors at IVP, a later-stage venture capital firm based in Menlo Park, CA.

Originally published at https://www.ivp.com on November 4, 2021.

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