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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Corporate expense management platform Divvy has agreed to sell to small business financial software provider Bill.com for $2.5 billion.
Adding Divvy’s technology to its platform expands Bill.com’s solution. The new capabilities will help the California-based company enable its 115,000 customers to automatically manage accounts payable, accounts receivable, and corporate card spend. Additionally, Divvy’s tools will offer businesses real-time insight into their B2B spending and provide them access to multiple payment solutions.
Combining the two companies also boosts Divvy’s capabilities. The Utah-based company will be able to offer its 7,500 small business customers automated payable, receivables, and workflow capabilities. “As we listened to our customers, we heard them ask for a comprehensive payments platform so that they don’t have to use multiple software systems to manage their finances,” said Divvy CEO and Co-Founder Blake Murray. “Today I’m proud that Divvy is joining Bill.com to bring the one-stop-shop platform that our customers and the market have been asking for.”
“Since founding Bill.com, I have been driven by the desire to build solutions that make a real difference for small and mid-sized businesses. Customers have been asking us to help them with their spend management, and I am excited that together with Divvy, we can deliver on that ask, furthering our vision to transform SMB financial operations. Our expanded platform will provide more automation and real-time information to SMBs, enabling them to make more informed decisions,” said Bill.com CEO and Founder René Lacerte. “We are excited to work with the talented Divvy team. We have a shared passion for helping SMBs succeed and both companies are driving our customers’ digital transformations. Together, we can further empower SMBs to transition quickly and easily.”
Today’s deal is expected to close by the end of September and is subject to regulatory approvals closing conditions.
Bill.com was founded in 2006 and went public in 2019. With a market capitalization of $12.33 billion, the company trades on the New York Stock Exchange under the ticker BILL.
Founded in 2016, Divvy has raised $418 million from investors including PayPal Ventures, Insight Partners, and New Enterprise Associates.
Payments network Ripple is bolstering its ranks this week with the appointment of Kristina Campbell as CFO.
Campbell has been tapped to drive Ripple’s financial strategy, accelerate growth, and deliver value to shareholders. She most recently served as CFO at PayNearMe and has also held multiple roles at GreenDot.
“Digital asset technology allows us to rethink and improve the systems and infrastructure around how money moves. With this technology, we will make the global financial system accessible to all,” said Campbell. “Ripple is uniquely positioned to improve global payments in ways that have yet to be defined and I’m excited to be a part of that solution.”
Ripple also revealed that Rosa Gumataotao Rios, 43rd Treasurer of the United States, has joined its Board of Directors. In her role as Treasurer, Rios oversaw all currency and coin production and focused on economic development, urban revitalization, and real estate finance.
“I’ve dedicated my career to financial inclusion and empowerment, which requires bringing new and innovative solutions to staid processes. Ripple is one of the best examples of how to use cryptocurrency in a substantive and legitimate role to facilitate payments globally,” said Rios. “Blockchain and digital assets will underpin our future global financial systems. Cryptocurrency is the what. Ripple is the how.”
Ripple CEO Brad Garlinghouse said that the new appointees come “at a pivotal time for the company.” Garlinghouse’s phrase, “pivotal time,” is in reference to Ripple’s international expansion efforts; earlier this spring the company acquired a 40% stake in Asia-based cross-border payment specialist Tranglo. It is also a head nod to the lawsuit Ripple is currently facing.
The U.S. Securities and Exchange Commission (SEC) alleged that Ripple co-founder Chris Larsen and CEO Brad Garlinghouse conducted an illegal securities offering that raised more than $1.3 billion through sales of Ripple’s XRP currency. Ripple, which considers XRP as a currency and not an investment contract, is denying the allegations.
Backed by SBI Holdings, Santander, Andreessen Horowitz, and Lightspeed, Ripple has raised $294 million and is valued at $10 billion.
We caught up with Taylor Burton, co-founder of Till Financial, one of the many companies that are innovating in the youth financial wellness space. The Massachusetts-based startup, launched in 2018, introduced its free, collaborative family banking platform this spring. At the same time, Till secured $5 million in funding in a round led by Afore Capital – which is where our conversation begins.
You’ve just secured a significant investment. What does the funding mean for Till?
Taylor Burton: It means an increased ability to positively impact the trajectory of kids as they prepare for launch. The group of investors that we assembled share our vision for how collaborative family banking should look—we are excited to continue to add more supporters as we scale our platform.
We are thrilled to have the support of like-minded investors including Elysian Park Ventures, Pivotal Ventures with Magnify Ventures, Afore Capital, Luge Capital, Alpine Meridian Ventures, The Gramercy Fund, SM Ventures (the family office of the founders/CEOs of Stadium Goods) and Lightspeed Venture Partners’ Scout Fund. Also participating were angel investors such as the founders of fintech Petal, the founders of alcohol marketplace Drizly, the president of Transactis, and the president of 1800Flowers.
We will be adding to our high-quality team in all areas that support our customers through their journey on Till. Marketing that provides the content to help families have the first “real” conversation about money. Development to accelerate our vision of what our product can be, plus integrate all the great ideas coming out of the Till user community. And customer success to ensure that a Till family is maximizing its experience on the platform.
How does Till help empower children to become smarter spenders?
Burton: Till is designed to encourage open and honest discussions between parents and their kids. The goal is to help kids learn by doing and to gain confidence in spending decisions. We do this in the following ways:
The right tools: Till equips kids with their own bank account, digital and physical debit cards, and goal-based savings tools.
Emphasis on community: A child can easily set up a goal on the app that they can use to start saving toward and give family members (such as grandparents, other family members or community members) the opportunity to help pitch in. This gives members of the child’s network an opportunity to support them towards their goals. After all, it takes a village, and Till helps facilitate that.
Visualizing financial responsibility: Kids can also set up recurring payments for different ongoing responsibilities or subscription services that will get them used to the concept of paying bills on a timely basis.
That being said, along with teaching kids valuable saving habits, we want to be advocates for kids to feel empowered in their spending decisions just as much, if not more. Parents and the traditional legacy banking options tend to focus mostly on a child’s savings. At Till, we believe that we need to prioritize preparing kids to be smarter spenders, while supporting them through savings and investing. On our platform, kids learn to spend with intention and purpose, while parents gain confidence and trust based on transparency and accountability.
What is unique about the method that Till Financial uses?
Burton: One unique part of the app are the financial agreements which allow kids to have greater agency and responsibility over their money. Parents can create agreements and tasks that encourage kids/teens to understand the value of every dollar. By visualizing the financial responsibility of earning every allowance, they are able to be active participants in their financial journeys.
Additionally, as families are more spread out over time, Till reinforces the impact of community by leveraging family, friends, and members of their close networks to help the child reach their financial goals. Till also offers merchant partners curated with kids’ interests in mind. As we continue to grow, we will have more opportunities to add on to this list and provide kids with more incentives.
How does Till make money?
Burton: Till aims to be “first in wallet” and “only in wallet,” unlike other card offerings targeted at adults fighting to be “top of wallet.” Till captures value (revenue) when we deliver value to our customers. Unlike other legacy banks—and even some early digital ones that often time charge monthly or subscription fees—Till is free to all consumers, making us accessible to all users.
Till earns revenue in three ways: We earn an interchange fee (like all debit/credit cards) for facilitating the transaction between our users on vendors. There are also affiliate fees. We want our user’s dollars to go farther. We are negotiating both broad and proprietary relationships with the vendors that our kids spend with each day. Our kids get access to discounts and exclusive access and we get a percentage when the kid does choose to make a purchase. Everyone’s a winner: the kids receive a steeper discount on items that they were already planning to buy, while the merchant gains a new customer.
Lastly, there’s origination. Consumers’ needs change over time and our ability to create the best outcomes for our families depends on focus. It is not Till’s intention to be a kid’s forever bank, just their first bank. With that in mind a Till kid should be treated with the respect that they have earned on our platform for positive financial decisions at launch. When the time comes for kids to leave the house and strike out on their own, Till introduces them to our launch offers market. There, they can receive preferential treatment on loans, credit cards, and adult debit/checking. The adult financial institution gets a better, more valuable client; our consumer receives the advantages they deserve for being of sound financial mind; and Till receives an origination fee.
How important are partnerships to Till’s business plan?
Burton: Till’s merchant and venture partners are interwoven into our business plan to seamlessly offer kids/teens and their families the best resources to develop responsible spending habits. As Till continues to expand their merchant partnerships, kids will have greater access to exclusive offers that they can use on items that they are already planning to purchase. These key partners include top tier brands that kids already shop at such as Adidas, Stadium Goods, and Dick’s Sporting Goods. And, of course, we also believe that the partnerships with our investors are a key component of the continued success of Till. We want our investors to share the same mission of empowering the next generation of economic actors.
What in your background gave you the confidence to tackle this challenge?
Burton: For starters, all three of us co-founders are dads and we’ve all had our share of financial awakenings whether with our kids or ourselves personally. That being said, Till is not just for us, but for the 50 million families that know there is a better way to raise a family; where financial conversations are collaborative not confrontational, and where all of our kids are better prepared for the modern economy.
On the company-building front, the founding team brings together everything needed to build a valued and valuable company. I bring expertise in direct-to-consumer products in a heavily regulated market (Drizly and alcohol delivery), coupled with innovation success in payments rails and merchant partners integration (PayPal and card-linked offers). Tom (Pincince) came to me with this idea after selling his third company. This serial entrepreneur has built a career by finding gaps and opportunities created by market movements and technology changes. And then Brian (Chemel), a multi-time technical founder equipped to marry the best of the old and the new to build a secure and scalable infrastructure backing a delightful and engaging user experience.
Looking back on 2020, what is your biggest professional takeaway?
Burton: We learned to be comfortable with being uncomfortable. COVID-19 impacted people’s businesses differently and when you layer in a fundraise and being an early stage start up, that can either make you or break you. In our case I think it really codified our commitment to our mission and vision and has ultimately put us in the position we are in now.
What can we expect from Till over the balance of 2021 and beyond?
Burton: Our first job is to become an integral part of millions of families’ every day financial activities. We do this by building an engaging platform that delivers both economic and social value. Along the way you will see Till add features that help parents and kids understand where they are on a financial journey and how their decisions can be rewarded by access to opportunities, experiences, and offerings. We are here to serve our users who are already helping us set priorities and guide us to new features and functionality. We are already getting requests for collaborative investing and philanthropic giving features, for example.
We are thinking big because the market is massive– there are currently 50 million pre-banked kids in the U.S. and yet, the average middle-class family in America spends $284,570 per child by age 18. At Till, we believe kids are a major economic force, as $18 billion per year is given by parents to children in the form of an allowance (mostly as cash). We recognize that they are influencers on larger family decisions, such as cars, vacations, etc. By putting the spending power back into the hands of young people, we want to be the driving force that replaces awkward family conversations about money with real actions and experiential learning.
A new challenger bank launched this week with the goal of serving the needs of Latin American consumers in the U.S. Built on Galileo’s payment processing platform, Miami, Florida-based Fortú is dedicated to providing culturally-contextual financial and banking services to the country’s growing Latino and Hispanic populations.
Fortú co-founders Charles Yim and Apoio Doca bring a combination of Big Tech savvy and global neobanking experience to the task of better serving the 22% of Hispanic adults who, according to the Federal Reserve, are underbanked. Yim is a former Amazon Web Services and Google executive with a background in business development and partnerships. Doca helped build a pre-smartphone era digital bank based in Brazil called Lemon Bank that was acquired by Banco do Brasil.
The Fortú team features both first and second generation immigrants with family ties to many of the largest Spanish-speaking countries in Latin America. Together they bring this experience to the cause of helping others negotiate the unique challenges many Latinos and Hispanics face when banking in the U.S.
“Compared to other demographics, Latinos in the U.S. are more likely to live in multigenerational and multilingual households, with a significant percentage needing to send regular cross-border remittances, leading to an over-reliance on non-bank financial services,” Doca said. He added that financial barriers for Latinos and Hispanics can range broadly from a lack of non-English language services to more mundane annoyances like the tendency to randomly truncate Latino names – many of which do not fit within the 24-character embossing standard used by most financial institutions.
Fortú offers a digital bank account that can be opened without needing a social security number; a Mastercard debit card; fast, no-hidden-fee international transfers (courtesy of a partnership with Finovate alum Wise), as well as the ability to deposit cash at more than 100,000 retail locations like CVS and Walmart, and make free cash withdrawals at more than 55,000 Allpoint ATM locations.
“By creating products to answer the needs of Latinos, who are more likely than the general population to be under- and unbanked, Fortú has set itself apart from other neobanks, while transforming financial wellness for the Latino community,” Galileo CEO Clay Wilkes said.
Fortú has raised $5 million in funding from Valar Ventures and other investors. The fintech’s banking services are provided by LendingClub Bank.
Loyalty and rewards may seem like dated technology. After all, the conversation around loyalty and rewards peaked in 2012 when merchant-funded rewards and in-statement offers were the hottest new customer acquisition bait.
Today’s banking environment that focuses on the customer is proving that the technology isn’t all hype, however. Almost a decade after the merchant-funded rewards conversation, there’s still activity going on in the loyalty and rewards space.
As proof, banking app and smart card Curve announced today it is partnering with purchase-based marketing intelligence firm Cardlytics, which will power Curve’s new rewards program. Dubbed Curve Rewards, the app will offer Curve users a range of rewards from Cardlytics’ brand partners, including Pret a Manger, JustEat, FatFace, Harvey Nichols, and Cult Beauty. Two of the merchants piloting Curve’s new program, Harvey Nichols and Cult Beauty, will offer 20% off and 5% off respectively.
Curve Rewards leverages Cardlytics’ purchase intelligence data and will help customers earn while they spend. This data-driven approach ensures that the rewards offered to the consumer are personalized to their spending habits.
“Today’s consumers want a reward scheme that is tailored to how they shop and why they shop,” said Cardlytics’ Head of Bank Partnerships Campbell Shaw. “We’re pleased to have built a reward scheme for Curve that does just that, putting customers back in the driving seat while building loyalty and engagement for Curve.”
The partnership is especially notable for Cardlytics. In the company’s thirteen year history, the partnership with Curve is its first digital-native brand. Up until this point, Cardlytics’ partnerships were primarily with traditional financial institutions, including Lloyds Banking Group, JP Morgan Chase, Wells Fargo, and Santander.
In an era when SPACs are the hip new way to take a company public, corporate expense management technology company Expensify is taking the old fashioned route.
The San Francisco-based fintech announced this week it has submitted an S-1 document– a key step on the road to an initial public offering to the SEC. The S-1 was submitted confidentially. Since Expensify is considered an “emerging growth company,” the contents of the filing do not need to be made public until 21 days prior to the road show for the IPO.
Expensify, which reached profitability at the end of 2018, has not yet determined the size and price range for the proposed IPO.
Founded in 2008, Expensify launched with its flagship receipt-scanning app and a simple motto, “Expense reports that don’t suck!” Since then, the company has gone on to launch a corporate payment card, offer a COVID-friendly virtual travel assistant, andexpand into billpay.
Expensify’s IPO is expected to commence after the completion of the SEC review process, subject to market and other conditions. The company has raised a total of $38.2 million. David Barrett, who Finovate interviewed about the company’s launch, is CEO.
Buy now, pay later (BNPL) company Sezzle is planning to strike while the iron is hot.
The Minnesota-based firm, which is already publicly-listed on the Australian Stock Exchange (ASX), is hoping to capture U.S. investors, now that the BNPL trend has exploded in this continent. Plans for the public listing are still in early stages. Details, such as the timing, price, and use, have not been revealed.
Prompting the plan to list is the company’s recent growth. According to its latest earnings announcement, Sezzle added 400,000 customers and recruited 7,300 active merchants in the first quarter of this year. This boost brings the firm’s total users to 2.6 million and total merchants to 34,000. Not surprisingly, the surge in usage helped increase the company’s first quarter income, which was reported at $22.3 million.
Sezzle initially went public on the ASX in July of 2019, raising $30 million on its first day of trading. The company now has a market cap of over $777 million. This figure is almost 5x higher than it was at the start of 2020. Sezzle’s move to the U.S. public markets follows its competitor, Affirm, which debuted on the Nasdaq at the start of this year.
Sezzle’s BNPL technology allows customers to split their ecommerce purchases into four installments with only 25% down and no fees. The offering is currently available to shoppers in the U.S., Canada, and India, and will soon be offered to residents in Brazil.
In February, Sezzle teamed up with Discover to work with select merchants on Discover’s network to help them provide their customers with additional payment options. Last September, the company launched a virtual payments card that helps customers benefit from Sezzle’s BNPL tech when they make purchases at brick-and-mortar stores.
Sezzle was founded in 2016. Charlie Youakim is CEO.
In a round led by Meritech and Greylock, Canada-based fintech Wealthsimple has secured $610 million (C$750 million) in funding. The investment takes the online brokerage’s total capital to more than $1 billion, more than triples the company’s most recent valuation to $4 billion, and represents one of the largest financings for a Canadian technology company to date.
“Seven years ago, we launched Wealthsimple with just four people and a mission that many thought was naive: use technology and innovation to revolutionize the finance industry so every Canadian could achieve financial freedom, no matter who they are or how much money they have,” Wealthsimple co-founder and CEO Mike Katchen wrote on the company’s blog this morning. “I’m happy to say that our mission doesn’t seem quite so naive anymore.”
Also participating in the round were DST Global, Sagard, Iconiq, Dragoneer, TCV, iNovia, Allianz X, Base 10, Redpoint, STEADFAST, Alkeon, TSV, and Plus Capital. A host of Canadian celebrities were also involved in the funding, including actors Ryan Reynolds and Michael J. Fox; athletes Kelly Olynyk, Dwight Powell, and Patrick Marleau; and singer Drake.
Since its inception in 2014, Wealthsimple has grown into a firm with more than two million users who enjoy commission-free stock trading, automated investing, as well as access to cryptocurrencies and tax services. This spring, the company introduced its cash app, which enables Canadians to send and receive cash “in seconds.” Free and requiring no minimum balance to use, Wealthsimple Cash has been likened to Venmo, a popular cash app in the U.S. The app currently has daily spending limits of $5,000 a day and $20,000 a month; Wealthsimple said that this is significantly more generous than what is available through the big banks.
Wealthsimple’s investment news comes as the Toronto, Ontario-based fintech pivots to pursue new opportunities in the Canadian market (the company sold its U.S. investment advisory business to Betterment in March). During the investing mini-mania surrounding Robinhood and shares of Gamestop earlier this year, investors in Canada were weighing in by making Wealthsimple’s trading app the number one app on Canada’s Apple App Store and on Google Play. This ratings boost was accompanied by a 50% gain in sign-ups and a 2x increase in trading volume. The environment created by the global pandemic, according to Wealthsimple’s Katchen, played a significant role in the company’s growth; 18% of the country’s new brokerage accounts in the first half of 2020 were opened on Wealthsimple’s platform.
Like a growing number of fintechs, Wealthsimple also plans to extend its offerings to include cash, checking, insurance, and mortgage products with the goal of becoming the customer’s “primary financial institution“. The company initially earned its unicorn status in October, after securing an investment of $93 million (C$114 million). Power Corporation of Canada is the company’s majority shareholder, with a 43% of the company post-financing.
“We have built a world-class financial technology partner ecosystem which our clients can tap into as they build a future-proof bank,” Thought Machine CEO Paul Taylor explained. “The firms we choose to partner with are those that have built meaningful, ultra-reliable products that ultimately improve the banking experience for customers. We look forward to working with Wise to bring its industry-leading payments solution to many more financial institutions, and customers, around the world.”
To ensure cross-system interoperability, Thought Machine and Wise have built an integration layer that cuts down on the amount of development work needed to plug into Wise’s API by as much as 60%. The partnership is a response to the growing demand for faster, more affordable, and transparent multi-currency banking, and comes amid a broadening trend away from reliance on legacy core banking technology and traditional correspondent banking networks.
“Though the internet has transformed much of the economy, the global banking system has lagged behind and moving money internationally has remained slow, difficult, and expensive for most,” Wise Platform & Wise Business Managing Director Stuart Gregory said. “Our mission is to change this 一 a goal we share with Thought Machine. Our integration today makes it quicker and easier for financial institutions and banks to enable faster and cheaper payments for their customers and brings us one step closer to our mission of building money without borders.”
Wise is actually the second money transfer company that Thought Machine has teamed up with in the first half of 2021. In February, the company announced that it was working with TransferGo, who will use Thought Machine’s Vault to provide advanced platform capabilities that will enhance the customer experience. The company also recently forged partnerships with German software engineering company GFT to launch challenger bank BankLiteX, and with full-stack fintech solution provider Vacuumlabs, which leveraged ThoughtMachine’s Vault to power a virtual bank in Hong Kong. An alum of FinovateEurope, London-based Thought Machine has raised more than $148 million in funding.
A Finovate alum since 2013, Wise moves more than $6 billion every month, saving its 10 million customers $1.5 billion in hidden fees every year. Rebranding as Wise in February, the company unveiled its product roadmap earlier this month, highlighting new initiatives in customer experience, spending and cards, expansion, small business services, and security. The company offers a multi-currency account that enables individual users to take advantage of real exchange rates in more than 50 international currencies. Wise Business provides payment services including invoice payments, debit cards, P2P payments, and cash management to more than 400 businesses. The firm includes companies ranging from fellow Finovate alum Xero to challenger bank N26 among its customers.
After reviving Google Pay in November of last year, Google made an announcement today that is sure to turn some heads in the fintech space. The two most relevant elements in today’s news release are new shopping options and spending insights.
To offer new shopping options, Google has partnered with Safeway and Target to help users browse weekly deals on groceries at Safeway and Target locations from within the Google Pay app. The app will enable shoppers to save their favorite items to purchase at a later date. Soon, users will be able to turn on push notifications to see deals from 500 Safeway stores and nationwide Target stores when they are nearby (if they have location services enabled).
The additional embedded shopping tools bring added stickiness to the app. However, Google will need to offer shopping experiences at more than just two stores to truly capture users’ attention.
Google Pay’s new spending insights tool comes a bit closer to what consumers may expect to see at their traditional bank. Via the Insights tab, users can see their account balance, view upcoming bill reminders, analyze weekly spend summaries, and receive alerts when large transactions are made. Under the Insights umbrella, Google also made it easy for users to view transactions by merchant or by category.
While the new spending insights may prove to be useful to shoppers, without more robust budgeting, planning, and forecasting tools Google Pay is unlikely to win consumers over from their traditional bank.
In today’s release, Google also added two more cities in which travelers can pay for transit. Via an integration with Token Transit, users in the San Francisco Bay area and Chicago can purchase and use mobile transit tickets through the Google Pay app. The two new cities join the list of 80 cities and towns across the U.S. that already offer travelers transit purchasing capabilities via Google Pay.
Regardless of the shortcomings of today’s new features, both banks and fintechs should be wary of Google Pay’s next moves. The app’s embedded finance capabilities, including grocery shopping and added transit ticket purchasing, are a signal of what is to come. Similarly, if Google Pay continues to add more personal financial management tools, such as budgeting and retirement planning, consumers may want to spend more time within the Google Pay environment and less time in their traditional banks’ app.
Today brings yet another indication that QR codes are back in style. Fiservannounced it is partnering with PayPal to enable businesses to use QR codes to offer touch-free payments at the point of sale.
Through the partnership, small and mid-sized businesses using Fiserv’s Clover point of sale and large enterprises leveraging the company’s Carat commerce ecosystem will be able to accept payment via PayPal and Venmo through QR codes at the point of sale.
“With consumer preference shifting towards touch-free interactions, it’s critical that businesses are able to connect physical and digital commerce,” said Fiserv’s Head of Global Business Solutions Devin McGranahan. “By enabling consumers to pay digitally via a QR code and popular digital wallets like PayPal and Venmo, businesses are providing added convenience and choice as in-person shopping, dining and entertainment experiences resume.”
As shown in the video above, the QR codes make the touch-free payment process relatively frictionless. Nonetheless, there is one catch– users must have a PayPal or Venmo account and mobile app.
Consumers may be willing to endure the extra friction, however, as people have become more likely to try out new digital technologies in the wake of the pandemic.
Fiserv’s announcement comes about a month after the company agreed to acquire payment processing and payment acceptance startup Pineapple Payments.
Founded in 1984 and headquartered in Wisconsin, Fiserv’s technologies serve nearly six million merchants across the globe. Frank Bisignano is president and CEO.
“Our mission is to help improve the financial futures of the next generation and we’re thrilled to have such a massive vote of confidence from investors, especially during Financial Literacy Month,” Step CEO and founder CJ MacDonald said. “Thirty-eight percent of teens say they lack the financial resources needed to achieve financial independence and this is a problem Step is well positioned to help solve as we educate millions of households every day.”
The round was led by General Catalyst and featured participation from an exceptionally diverse group of existing investors. This roster included Coatue, Stripe, Charli D’Amelio, The Chainsmokers’ Mantis VC, Will Smith’s Dreamers VC, Jeffrey Katzenberg’s firm WndrCo, actor Jared Leto, Franklin Templeton and NBA All-Star Stephen Curry. The investment takes Step’s total funding to more than $175 million.
In the time since Step launched in September of 2020, the company has amassed more than 1.5 million users of its financial wellness app. Step gives users a free, FDIC insured bank account, a secured spending card, and access to a P2P payments platform that enables users to send and receive money instantly. With 88% of the company’s users saying that Step is their first bank account, the platform claims that it is the only banking platform that enables youth to build a positive credit history before they reach 18 years old.
“For too long, conversations about money –– specifically how to manage it –– have been avoided despite what a critical role they play in shaping the future of the next generation,” actor, musician, and serial tech investor Jared Leto said. “Over twenty years ago, I set out to tackle this problem by starting a company in the space, so I’m excited to see Step addressing the financial literacy crisis head on with game-changing technology built to help young people learn about money in their digitally native environments.”
Step is headquartered in San Francisco, California, and was co-founded by MacDonald and Alexey Kalinichenko. The company’s financial solutions are backed by bank partner Evolve Bank & Trust.
