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Fintech Startups Target Younger Audiences, Investor Interest In Financial Literacy

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Children can learn good money habits at an early age, research says, and now a growing group of fintech startups is developing child-friendly tools and resources toward that goal, and attracting funding from venture investors who agree.

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“It bugs us that many schools don’t teach kids about money, even families don’t,” CJ MacDonald, co-founder and CEO of teen mobile banking app Step, told Crunchbase News. “You hear stories about people hiding what they buy and asking their kids why the kids bought what they did.”

The data varies somewhat as to the optimal age for children to start understanding financial concepts, but many researchers agree that young children, even as young as 3, can grasp the basic idea of money. And research shows that by age 7, many of their money habits are already set, mainly influenced by their parents.

Spending and saving

While researching the fintech space, Tanya Van Court felt many of the popular savings apps enabled children to spend money too easily. Leveraging her background working at Nickelodeon, which involved digital strategy of its preschool and parenting websites, and Discovery Education, where she launched digital textbooks to schools, Van Court saw a need to engage and excite children in learning about money.

In 2016, she founded Goalsetter to provide an education-first banking experience aimed at young children that could grow with them. The startup raised $3.9 million in seed funding in January led by Astia.

“We surveyed parents on what kind of platform they wanted, and they told us that they didn’t want children to just spend, but to learn how to save money and learn about financial literacy,” Van Court, founder and CEO, said in an interview.

She sees one of the challenges in learning about money is that while much of the world is going cashless, most parents are not.

“Kids ask for $10 or money to go and buy school supplies, and unless the parent has that cash on them, there are few ways of transacting,” she added. “Apps with peer-to-peer transactions have become an easy way for grandparents, aunts and uncles to send money to kids. It takes the entire family cashless.”

Dean Brauer, co-founder and president of gohenry, launched the company in 2012. His startup offers a debit card and smart money app for children and teens and has raised $66.2 million in known venture funding, according to Crunchbase data. That includes a $40 million venture round in December led by Edison Partners.

With only 17 states in the U.S. mandating financial literacy, Brauer said, there is an opportunity for companies to not only collaborate with schools, but also to drive education by forming relationships with users and potential users.

“We are giving a tool to parents who might not feel confident, and worry about how to teach their kids about money,” Brauer said in an interview. “We guide them to the right behaviors that empower their children. It’s not just around a card and spending, it is mindful nudges and notifications across earning, saving and spending.”

Investment

As these apps and platforms attract new customers, investors are taking notice, too.

Crunchbase data shows that in the past five years, investors infused at least $535 million into 89 known deals with fintech startups that described themselves as offering savings platforms for children, young people and parents.

Of that, $344 billion was raised just in 2020. Leading the pack was Greenlight Financial Technology, founded in 2014, which guides parents to teach children how to save with its app and debit card products. The fintech company secured a $1.2 billion valuation after closing on $215 million in Series C funding last September, led by Canapi Ventures and TTV Capital.

Cooper Banking raised $4.3 million in seed funding last August in a round led by PSL Ventures, and founder Eddie Behringer said there was “a tremendous amount of inbound interest.”

“What is different today is how quickly fintechs are growing in the consumer banking space,” Behringer said in an interview. “There are 85 million parents and teens in the U.S., and the perception is that this demographic is one of the last unbanked segments that exist.”

Likewise, Chris Sugden, managing partner at gohenry investor Edison Partners, said with today’s environment, particularly with many people losing their jobs due to the global pandemic, now is the optimal time for adults to speak with children about money. The pandemic also highlights how valuable startup banks, or neobanks, are in focusing on underserved populations.

“Kids are not worth much upfront to banks, so the incumbents aren’t paying attention,” Sugden said. “The challenge is for startups to raise the brand. We love the fact that gohenry is a market leader in the U.K. and love the opportunity for them to be a market leader in the U.S.”

Teen beat

Teens can learn about money, too, according to MacDonald and Behringer.

MacDonald believes financial literacy starts with a bank account, and Step’s sweet spot is children ages 13 to 18. The fintech startup was formed in 2018, but launched its free FDIC-insured bank account and Step Card in October 2020, MacDonald said.

Step has raised $76.3 million in venture backing so far, most recently, a $50 million Series B round led by Coatue in December 2020 that attracted some high-profile investors including Justin Timberlake and Eli Manning.

MacDonald scouted out movie theaters to observe and interview teens about their relationship with money.

“What became clear is a gap in the marketplace with banks,” he said. “Some fintechs are catering to the 18-and-over demographic. We said, ‘Hey, let’s start where the financial journey starts, build a relationship and offer products for each step of their life.’ Our mission is to educate the next generation how to be smarter about money.”

Behringer’s Copper Banking, founded in 2019, also targets teens, and the app’s median age is 14. The company focuses on distribution through schools and is working with schools in Texas, California and Florida to educate students about bank accounts, debit and credit cards and saving, Behringer said.

One of the app’s signature features enables users to automatically save a portion, from 5 percent to 20 percent, of the money coming in.

“Parents feel overwhelmed and when they use apps like Copper Banking, feel like a massive weight is lifted,” Behringer said. “Teens often learn by doing, and you can teach teens early. The basics are not complicated, but you have to have someone start that conversation.”

What’s next

In an increasingly digitized world, many children may never set foot inside a bank branch. That means there is an opportunity for fintech startups to help parents teach their children about money, MacDonald said.

Van Court agrees. The sector targeting financial technology for kids and young adults “is the most important fintech out there,” she said.

“The earlier you can acquire a customer, the more control you have over that customer’s eventual financial path,” she said. “If we acquire a customer at 5 years old, we have an opportunity to keep them and be there for every one of their milestone moments.”

Meanwhile, Nancy Bock, senior director of communications and marketing at the American Association of Family & Consumer Sciences, finds fintech startups to be helpful partners in financial education as long as they have qualified professionals and collect personal data in a way that follows privacy laws that protect minors.

Many of the apps have processes in place to address security, such as not keeping a Social Security number after a bank account is set up, notifying both parent and child when money is spent, the ability to lock an account from the app if a credit card is lost, and partnering with banks to offer FDIC-insured accounts.

“Financial literacy is an essential life skill,” Bock said in an interview. “Youth need to build sound habits so that it doesn’t lead to higher debt. They are also very impressionable and think that what they see on their phones and social media is the truth, so it is often hard to talk to them about tomorrow because they are only thinking about today.”

Illustration: Dom Guzman

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

BloomNation enables florists to control how they work by taking their own photos, creating their own designs and pricing for their market.

Rightfoot’s API enables developers to integrate debt payment functionality into any fintech, banking or benefits application.

Software engineers can develop against its API to embed cross-border payments for customers in as quickly as two days.

Source: https://news.crunchbase.com/news/fintech-startups-target-younger-audiences-investor-interest-in-financial-literacy/

EdTech

A first look at Coursera’s S-1 filing

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After TechCrunch broke the news yesterday that Coursera was planning to file its S-1 today, the edtech company officially dropped the document Friday evening.

Coursera was last valued at $2.4 billion by the private markets, when it most recently raised a Series F round in October 2020 that was worth $130 million.

Coursera’s S-1 filing offers a glimpse into the finances of how an edtech company, accelerated by the pandemic, performed over the past year. It paints a picture of growth, albeit one that came at steep expense.

Revenue

In 2020, Coursera saw $293.5 million in revenue. That’s a roughly 59% increase from the year prior when the company recorded $184.4 million in top line. During that same period, Coursera posted a net loss of nearly $67 million, up 46% from the previous year’s $46.7 million net deficit.

Notably the company had roughly the same non-cash, share-based compensation expenses in both years. And even if we allow the company to judge its profitability on an adjusted EBITDA basis, Coursera’s losses still rose from 2019 to 2020, expanding from $26.9 million to $39.8 million.

To understand the difference between net losses and adjusted losses it’s worth unpacking the EBITDA acronym. Standing for earnings before interest, taxes, depreciation, and amortization, EBITDA strips out some non-operating costs to give investors a possible better picture of the continuing health of a business, without getting caught up in accounting nuance. Adjusted EBITDA takes the concept one step further, also removing the non-cash cost of share-based compensation, and in an even more cheeky move, in this case also deducts “payroll tax expense related to stock-based activities” as well.

For our purposes, even when we grade Coursera’s profitability on a very polite curve it still winds up generating stiff losses. Indeed, the company’s adjusted EBITDA as a percentage of revenue — a way of determining profitability in contrast to revenue — barely improved from a 2019 result of -15% to -14% in 2020.

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Source: https://techcrunch.com/2021/03/05/a-first-look-at-courseras-s-1-filing/

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Coursera Files To Go Public After Online Learning’s Big Year

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Following a busy year for edtech, online learning platform Coursera has filed to go public.

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Coursera is backed by investors including The World Bank and EDBI. The investors set to receive the biggest payout from the IPO include New Enterprise Associates, G Squared, Kleiner Perkins and Future Fund.

As a private company, Coursera raised more than $443 million in funding, according to Crunchbase. It last raised a $130 million Series F led by NEA in July 2020.

Coursera reported $293.5 million in revenue in 2020, up 59 percent from $184.4 million in 2019. Its net loss also grew in that period from $46.7 million in 2019 to $66.8 million in 2020.

As of the end of 2020, the company has over 77 million registered learners on its platform. More than 4,000 academic institutions, 2,000 organizations and 300 government entities had used Coursera for student, employee and resident training, the company said in its S-1. 

Edtech in general has been a topic of discussion over the past year as the COVID-19 pandemic has forced distance learning on teachers and students. The company acknowledged how the pandemic “sharply increased the need for online learning beginning in 2020,” but also stated in its Risk Factors section that it couldn’t predict if the online learning trend would stick.

“Although we believe our business has also been positively impacted to some extent by several trends related to the COVID-19 pandemic, including the increased need or willingness of businesses, governments, and educational institutions to adopt remote, online, and asynchronous learning and training, we cannot predict whether these trends will continue if and when the pandemic begins to subside, restrictions ease, and the risk and barriers associated with in-person learning and training decrease,” Coursera wrote.

It also acknowledged among its risk factors that, “while the COVID-19 pandemic has accelerated the market for online learning solutions, it is still less mature than the market for in-person learning and training, which many businesses currently utilize, and these businesses may be slow or unwilling to migrate from these legacy approaches.”

Coursera is one of the bigger names in the world of edtech, partnering with well-known institutions like Stanford University and Princeton University to offer courses such as Introduction to Logic, Machine Learning and Essentials of Palliative Care. 

One of its more interesting risk factors: Coursera acknowledged that the reputation of for-profit postsecondary institutions and the scrutiny they’re under could negatively impact its business, despite the company steering clear of them.

“Even though we do not market our solutions to these institutions, this negative media attention may nevertheless add to the skepticism about online higher education generally, including our solutions,” the company wrote.

Coursera is one of several venture-backed companies to file to go public in the past week. ThredUp, AppLovin, Compass and Vizio all filed S-1 registration documents with the Securities and Exchange Commission this week. 

Morgan Stanley, Goldman Sachs and Citigroup are among the underwriters for Coursera’s IPO. The company has applied to list on the New York Stock Exchange under the ticker COUR. 

Illustration: Dom Guzman

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

While 2020 wasn’t a banner year for most things, that’s also true for M&A dealmaking in cybersecurity. However, last month saw some interesting…

While shares opened at $39, they slid throughout the day to close at $34.80, down 12 percent.

The company reported about $1.45 billion in revenue in 2020, up from $994.1 million in 2019.

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Source: https://news.crunchbase.com/news/coursera-files-to-go-public-after-online-learnings-big-year/

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Here’s Who’s Gone Public in 2021 (So Far)

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Another year, another list.

In past years, we’ve mostly covered venture-backed tech and tech-ish IPOs in this perennial list of startups going public. Occasionally, a direct listing here and there would make the list, but the vast majority of companies going public were doing so through a traditional IPO. This year looks like it will be a bit different, with the increasing popularity of SPACs and new rule changes making direct listings more favorable, now that companies can raise capital through that route. 

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So, we’ve adapted our ever-updated Here’s Who’s Gone Public list to fit more with the times, and are including both traditional IPOs and other methods of going public. So far this year, that means IPOs and SPACs. 

While SPACs are going public at a more frequent pace than traditional IPO companies, we’ve included only the ones that have completed a merger with a target company and begun trading as a combined company. 

This list will be updated regularly to keep up with the robust IPO and SPAC pipeline coming up this year, so be sure to check back.

Most recently updated: March 5, 2021

IPOs

Affirm

IPO date: Jan. 13, 2021
IPO price: $49
IPO valuation: $11.9 billion
Initial post-IPO arc: Positive

In the first venture-backed tech-ish IPO of the year, Affirm saw its stock price jump 100 percent on its first day of trading before closing out at $97.24. Affirm is  a big player in the increasingly-popular “buy now, pay later space,” which includes companies like AfterPay and Klarna. Since it went public in mid-January, the company’s stock has moved up and down, but overall its trajectory has been positive. Affirm’s stock closed at $105.55 on Feb. 18.

Poshmark

IPO date: Jan. 14, 2021
IPO price: $42
IPO valuation: $3 billion
Initial post-IPO arc: Negative

Poshmark’s stock price doubled pretty much right out of the gate, and ended up closing out its first day of trading up 140 percent. The company, which operates a marketplace for new and second-hand clothing and accessories, reached a valuation of $3 billion with its IPO, one of the first of this year. But since Poshmark’s public market debut, its stock has fallen quite a bit. The company’s stock closed at $68.39 on Feb. 18.

Playtika

IPO date: Jan. 15, 2021
IPO price: $27
IPO valuation: $11 billion
Initial post-IPO arc: Positive

Gaming is all the rage as people look to stay entertained at home during the COVID-19 pandemic. The market response to Playtika reflects that. Playtika’s stock price since its mid-January debut has been mostly positive. The company’s stock closed at $32.56 on Feb. 18, still above its first day of trading close of $31.62. 

Qualtrics

IPO date: Jan. 28, 2021
IPO price: $30
IPO valuation: $15 billion
Initial post-IPO arc: Positive

Qualtrics’ IPO was significant for a couple different reasons. It wasn’t a traditional venture-backed tech company going public, but one that had already been acquired. After SAP acquired the company in 2018 before Qualtrics’ planned IPO, SAP ended up spinning it out in 2021. The IPO was also significant because it ended up being the largest IPO of a Utah-based company. Qualtrics’ public debut valued the company at $15 billion, and its stock price arc has been positive since. Qualtrics’ stock closed at $44.63 on Feb.18.

Bumble

IPO date: Feb. 11, 2021
IPO price: $43
IPO valuation: $8.2 billion
Initial post-IPO arc: Positive

Bumble’s IPO made founder and CEO Whitney Wolfe Herd a billionaire and the youngest woman to take a company public. It was also a big deal for Texas’ tech scene, as the dating app is a homegrown Austin company. The company raised $2.15 billion through its IPO and its stock closed 64 percent above its IPO price on its first day of trading. Overall, its post-IPO arc since then has been positive, and its stock closed at $74 on Feb. 18.

Oscar Health

IPO date: March 3, 2021
IPO price: $39
IPO valuation: $7.9 billion
Initial post-IPO arc: Negative

As of this writing, Oscar Health has been a public company for less than three days. So, its negative post-IPO arc should be taken with a grain of salt — especially because the market in general dipped at the end of its first week of trading. That said, Oscar’s public market debut wasn’t like many of the venture-backed IPOs we’ve seen recently where the stock surges right out of the gate. The company initially set a price range of between $32 and $34 before increasing it to between $36 and $38, and pricing at $39. The company closed its first day of trading at $34.80, and its stock closed at $31 on Friday, March 5.

SPACs 

Clover Health

First day of trading: Jan. 8, 2021
SPAC proceeds: Up to $1.2 billion
SPAC valuation: $7 billion, according to the Silicon Valley Business Journal
Initial stock price arc: Negative

Clover Health was the first VC-backed company to go public via a special purpose acquisition company, with Chamath Palihapitiya’s SPAC, Social Capital Hedosophia V, acquiring the company. The company’s stock since the merger was completed in early January has trended negatively since it started trading, though, with its stock closing at $10.83 on Feb.18.

Billtrust

First day of trading: Jan. 13, 2021
SPAC valuation: $1.3 billion
Initial stock price arc: Positive.

Payment cycle management platform Billtrust went public in mid-January after merging with South Mountain Merger Corp. The company  raised $115 million in funding while private and announced plans to go public via a SPAC in the fall. Since the company’s stock started trading, its initial arc has been positive. Billtrust’s stock closed at $18.80 on Feb. 18.

Hims and Hers Health

First day of trading: Jan. 21, 2021
SPAC proceeds: $280 million
SPAC valuation: $1.6 billion, according to Forbes
Initial stock price arc: Positive

Hims and Hers Health, which initially started out as a company aimed toward men’s health issues, went public after merging with special purpose acquisition company Oaktree Acquisitions Corp. The deal was among the first major VC-backed SPAC mergers to be completed in 2021, and raised proceeds of about $280 million. Since the combined company’s stock started trading, its stock price has been trending up and closed at $19.01 on Feb. 18.

ChargePoint Holdings

First day of trading: Feb. 26, 2021
SPAC proceeds: $450 million, according to Inside EVs.
Initial stock price arc: Negative

Companies in the electric vehicle space are evidently popular targets for SPACs, and ChargePoint is among them. The company, which is based in Campbell, California, went public by merging with special purpose acquisition company Switchback Energy Acquisition Corp. Since the company completed the merger on Feb. 26 and began trading (closing at $30.83 last week), its stock has fallen a bit, closing at $26.13 on Friday, March 5.

Metromile

First day of trading: Feb. 9, 2021
SPAC proceeds: Unclear
Initial stock price arc: Negative

Digital insurance platform Metromile went public by merging with blank-check company INSU Acquisition Corp. II. The company, which is backed by investors including Index Ventures and Future Fund, follows other insurtech companies like Lemonade and Root to the public market, though through a SPAC rather than a traditional IPO. The company’s stock has mostly trended down since then, closing at $10.45 on Friday, March 5.

Illustration: Dom Guzman

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

While 2020 wasn’t a banner year for most things, that’s also true for M&A dealmaking in cybersecurity. However, last month saw some interesting…

While shares opened at $39, they slid throughout the day to close at $34.80, down 12 percent.

The company reported about $1.45 billion in revenue in 2020, up from $994.1 million in 2019.

For many startup employees, it often seems like the only options for liquidating their shares and receiving a payout for their equity in a company is…

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Trade with the Official CFD Partners of AC Milan
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Source: https://news.crunchbase.com/news/heres-whos-gone-public-in-2021-so-far/

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How and when to hire your first product manager

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In the world of early-stage startups, job titles are often a formality. In reality, each employee may handle a dozen responsibilities outside their job description. The choose-your-own-adventure type of work style is part of the magic of startups and often why generalists thrive here.

However, as a company progresses and the team grows, there comes a time when a founder needs to carve out dedicated roles. Of these positions, product management might be one of the most elusive — and key — roles to fill.

Product management might be one of the most elusive — and key — roles to fill.

We spoke to startup founders and operators to get their thoughts about how and when they hired their first product manager. Some of the things we talked about were:

  •  Which traits to look for.
  •  Why it’s important to define the role before you look for your best fit.
  •  Whether your new hire needs to have a technical background.
  •  The best questions to ask in an interview.
  •  How to time your first hire and avoid overhiring.

Don’t hire for the CEO of a product

Let’s start by working backward. Product managers often graduate into a CEO role or leave a company to become a founder. Like founders, talented product managers have innate leadership skills and are able to effectively and clearly communicate. Similarly, both roles require a person who is a visionary when it comes to the product and execution.

David Blake was a product manager before he became a serial edtech founder who created Degreed, Learn In, and most recently, BookClub. He says that experience helped him launch the first prototype of Degreed and attract first clients.

“The must-have skill is the ability to put the team’s best wisdom in check and inform the product decisions with users and potential clients to inform what you are building,” he said. The person “must also be able to take the team’s mission and develop and sell that narrative to users and potential clients. That is how you blaze a new trail, balance risk, while avoiding building a ‘faster horse.”

The overlapping synergies between PMs and founders is part of the reason why the role is so confusing to define and hire for. Ken Norton, former director of product at Figma who recently left to solo advise and coach product managers, says companies can start by defining what PMs are not: The CEO of the product.

“It’s about not handing off the product responsibilities to somebody,” he said. “You want the founder and the CEO to continue to be the evangelist and visionary.” Instead, the role is more about day to day “blocking and tackling.” Norton wrote a piece more than 15 years ago about how to hire a product manager, and it’s still an essential read for anyone interested in the field.

Define the role and set your expectations

Product managers help translate all the jugglers within a startup to each other; connecting the engineer with marketing, design with business development and sales with all the above. The role at its core is hard to define, but at the same time is the necessary plumbing for any startup that wants to be high-growth and ambitious.

While a successful product manager is a strong generalist, they have to have the ability to understand and humanize technical processes. The best candidates, then, have some sort of technical experience as an engineer or otherwise.

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Source: https://techcrunch.com/2021/03/05/product-manager-hiring-for-startups/

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