If Eddie Behringer asked his mother about using a technology app to store cash when he was a teenager, she would have scoffed.
But times have changed.
Behringer’s teen-focused fintech startup, Copper, has attracted more than 800,000 users in less than three years and just landed a $29 million investment round to fuel growth.
“Parents have historically made that decision of where you set up your first bank account,” Behringer said. “Gen Z is very powerful with decision-making in the household.”
The company, formerly known as Copper Banking, targets users in the 10- to 19-year-old range with a debit card and app experience that includes parents along the way. It incentivizes teens to save money by giving cash in exchange for hitting a savings goal or paying back parents on time. They can also earn money by simply passing a quiz about finance.
Now the 30-person startup is expanding to investing, with plans to let users direct funds from their accounts into investments such as stocks, mutual funds, and cryptocurrency.
It’s all part of the plan sketched out by Behringer and his co-founder Stefan Berglund when they started Copper, theorizing that teens in America were massively underserved when it came to financial education and offerings.
A number of factors are contributing to Copper’s fast growth, including the meme stock mania over the past few years that attracted young people to the financial markets and investment apps such as Robinhood.
The pandemic also forced physical bank locations to close temporarily; parents couldn’t go into a branch and create an account for their kids.
Part of Copper’s secret sauce is its marketing strategy. It lowers customer acquisition costs by going directly into middle- and high schools, running financial education workshops and providing access to its app. It’s the same tactic used by Snap! Raise, a Seattle software startup that Behringer and Berglund co-founded which helps facilitate school fundraisers.
Copper is part of a throng of finance startups targeting younger users, including Step and Greenlight. Fellow Seattle startup Stack is also trying to help teens invest, but with a focus on cryptocurrency.
Some financial education advocates are skeptical of these types of apps, noting that kids may not fully understand the nuance of the stock market and take more risks, as The New York Times reported last year.
Behringer said traditional finance business models rely on more frequent trading or monetizing off loans and credit. On the other hand, fintech platforms have enabled the opposite and don’t need to make money off “predatory practices,” he said.
“We don’t need to support the overhead of physical branches and can truly align the business model with the outcomes of our users,” he said. “We’re betting that providing real education behind this access will be good for business.”
“We’re betting that providing real education behind this access will be good for business.”
Copper, a finalist for Startup of the Year at the GeekWire Awards, earns revenue primarily from a fee that is charged to merchants running payments made via a Copper debit card. It also makes money from debit loads, when parents fund their kids’ account with a debit card.
An ongoing challenge for Copper is not only resonating with teens but convincing parents that its app is safe and secure. Parents must provide personal information so their kids can legally bank and invest with something like Copper.
“We do everything in partnership with parents,” Behringer said.
Fiat Ventures led the Series A round, which included participation from Panoramic Ventures, Insight Partners, Invesco Private Capital, and all existing investors. PSL Ventures, the venture capital arm of Pioneer Square Labs, was an early investor, in addition to Mana Ventures, Western Technology Investment, Clocktower Ventures, Index Ventures, Scout Fund, Launchpad Capital, Financial Venture Studio, Maven Ventures, Samsung Next and Arnold Ventures.
Copper closed a $13.3 million seed round in October. Total funding to date is $42.3 million.
