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On our live Deal Reveal call this week…

We shared the details of our latest FinTech investment with our Members.

One of their burning questions was, “Why did you guys invest so much money into this startup?”.

That’s a valid question –– we’ve never dropped this much cash into a Boardroom deal…

But before I answer though, you should know that today we opened this deal up to our entire Boardroom membership.

It’s also open to you through this one-time deal access.  

So what was it that got us to drop a combined $200,000 into this one company?

Well, here are a few reasons…

  • They’re backed by some of the best talent in the FinTech industry (Acorns leadership).
  • They are acquiring new users to their platform at industry-low costs (users valued at ~$300) and at a very healthy rate.
  • Their user data is an absolute goldmine to a potential acquirer.

This is just the beginning.

I’m sharing the details of my Deal Reveal call and a FinTech market overview in the investor brief that follows.

 

The Problem

 

There is a certain group that struggles to save money despite occupying the largest chunk of the workforce.

This group is massively underserved by the legacy financial institutions that just don’t make much sense to them

They want to save and spend money but do so differently, prioritizing short term goals and experiences. They save money to enjoy life now. 

In case you don’t already know, I’m talking about Millennials

Millennials are ready to adopt modern tools that work with their particular lifestyles. The market just hasn’t given them a complete solution to saving, spending, and meeting their goals — until now.

We recently landed a deal with a FinTech startup that addresses this problem with an innovative app aimed at Millennials. This is more than a piggy-bank, it takes the trend behind the unicorn startup Acorns and brings it to the next level. 

 

The Solution

 

This startup is more than just a trendy way to save. It’s a savings tool, a bank account, a rewards program, and an online marketplace where your purchases earn cash-back — all in one place and for zero fees

This is a “lifestyle banking app” that is set to disrupt two of the world’s most lucrative industries, Finance and Travel.

Users “save as they spend”, but rather than following the “rounding up” method of Acorns, this new startup gives users more control. You can set savings goals and define exactly how much you want to save on purchases. 

For that trip to Italy, you decide you’ll save 10% on purchases. You set your goal for three months, and you’re off to the races. Buying gas, groceries, a new pair of shoes, all contribute to your financial goal. 

Congratulations, you just met your goal. Guess what? The app partners with Booking.com and other travel providers. Move on over to the in-app marketplace and you can buy your tickets and hotel reservations and get 5% cash-back. Your cash-back goes right into your account and you can start saving for your next goal.

Or, maybe things didn’t go as planned, and you need that money for rent instead. Go ahead, take it. It’s yours. There are no lock-ups or withdrawal penalties. It’s your money, it’s right there when you need it.

 

Market Opportunity

 

Not convinced yet? Let’s explore the market. 

Millennials make very different spending and savings decisions than previous generations. There is a massive opportunity here waiting to be tapped

Millennials are the largest generation in US history. By 2025, they will represent 75% of the workforce and own the largest share of personal income — to the tune of $8.3 trillion.

We are talking about 83 million people who make surprisingly similar choices with money. 

A key concept here is the “experience economy“. Concerts, travel, adventures — that’s what they want to invest in. This app makes it easy for them.

On top of that, a survey by the AICPA shows that over 75% of Millennials want the same clothes, cars, and gadgets as their peers. They are even willing to go into debt to get them. They value “social currency” often more than real currency. 

This is where the startup’s marketplace comes in. By partnering with big brands and utilizing their affiliate marketing programs, this startup can turn a profit AND bump profits back to customers in the form of cash-back on purchases, without ever leaving the app or making a transfer. 

 

Why Invest

 

It’s clear that this startup is headed towards success. But, three things in particular give it an edge. 

  1. The company is backed by some of the best talent in FinTech.

The team has four of the masterminds behind Acorns. They turned Acorns into an $860 million success and now they have joined the next big thing. Not only did they invest in the company, but they also joined the management team.

  1. The platform is acquiring new users at industry-low costs.

For scalability, Customer Acquisition Cost (CAC) is everything. This startup is bringing in new users at an industry-low cost of $14, compared to $50 to $100 for their competition. Having already shown massive success in their marketing efforts, this goes to show how easily they can target and bring in new customers.

  1. The user data is a goldmine to a potential acquirer.

This startup knows what each user is saving for, how much they are saving, and exactly when they want to buy it. It’s easy to see why this information would be incredibly valuable to many brands and institutions. Looking for a speedy and profitable exit? When a startup cultivates data of this scale and value, you have an excellent chance of a quick payday.

 

Q&A Session With the Founders

 

Q – Why did The Boardroom invest more in this startup than any other startup? And from a non-Millennial’s perspective, why is this such a big opportunity? 

A – When you look at, for some people that are outside of the Millennial world, you see that everyone is using their handheld for everything. If you do the research you can see that the legacy brick-and-mortar banks are having a challenge. They are very concerned with the FinTech industry. Next, we have low Customer Acquisition Costs, with high Lifetime Customer Value (around $300 per customer). Finally, we have the leadership team to back it all up. When you combine this, whether you are in tune with the millennial world or not, you can see this opportunity.

Q – What prevents Acorns from upgrading their app and throwing in a percentage option instead of just the “round up”?

A – First of all, Acorns is coming up on a billion-dollars. For them to have so much success with their model and then add this new portion and kind of be admitting that they missed this area, just doesn’t make sense for them. They could probably figure this out over time, but they are built from the ground up as a long-term savings app.

Also, we’ve got a pretty big leg-up on them from the relationships we’ve built and the way we embrace the Millennials’ wants and needs, utilizing social media, utilizing these relationships with our affiliates to be able to offer cashback. One more thing, there are nine payment-type apps that have over a billion-dollar stake. So there’s plenty of room to play here. Let anyone that wants to play come play with us. We’re just going to do it better.

Q – Can someone push money from their other accounts into your application to take advantage of the cashback?

A – Yes. Not only can you use the money you have on the app, but you can also use the marketplace to buy whatever you want to get your cashback, coming straight from your checking account. 

Q – How much do you want to raise this round and what are you going to do with the capital?

A – We’re doing the maximum CF round of $1,070,000. 

  • 22% of that will go to developments, which means the sponsored ads we have to build and the maintenance on the app. 
  • 66% goes to marketing. We are currently spending $4,000 a month on ads, we are going to multiply that by ten with this funding. 
  • 12% goes into just operations of the app itself

Like what this startup is doing? Want to see how you can invest? We’re opening this deal up so YOU can be part-owner through this Boardroom Spotlight.

 

Author: Chris Graebe

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