Neobanks have made a name for themselves by winning the business of newly-minted adults, opening their first checking, savings and investment accounts, and not doing business withlegacy banks. GoHenry is announcing $55 million in funding to double down on the opportunity, as a new wave of startups and services gets a jump on that model.
The equity funding is coming from previous backers and includes an investment from a new backer.
I know the company is worth more than $250 million and less than $500 million, but they are not revealing it. It brings the total raised by GoHenry to $125 million, which includes a $40 million round in 2020 and a $15 million angel round. It has raised $136 million. GoHenry has 5,000 shareholders as a result of those campaigns, with half of them also users, and it has raised over 15 million dollars in Crowdfunding in the last two years.
Over the years, GoHenry has amassed a small amount of kids and parents. It now has 2 million customers across the U.K., the U.S., and France and Spain, all of which are between the ages of 6 and 18. They use two main services from the company, a pre-paid card and an app that parents can use to help monitor and manage the account.
COVID-19 broke open the bank when it came to the usage of fintech: consumer "digital transformation" played out in a couple of ways, with people socially preferring to use apps and sites to manage their finances, underscored by a shift in commerce also going online.
The company saw a surge of new users during the Pandemic and an increase in activity among existing customers. Kids in the U.K., GoHenry's main market, earned over one hundred million dollars in 2021.
Alex Zivoder said that they started at 6 because parents wanted a card for a child's 6th or 7th birthday. It was earlier than we anticipated. The best time for kids to understand money is now. He said that the concept is related to earning it. It's all about the money and the chores. In the teen years, teens do more spending and have more peer-to-peer transactions and more wages paid in from jobs or apprenticeships, which leads to more spending by younger children. He said it was the start of independence.
The trends point to GoHenry's growth. In the last full year that it was reported, it made $42 million, double what it made in 2020.
The plan is to launch a new gamified educational experience called Money Missions, expand its existing products, and consider where there might be opportunities to do more for those.
GoHenry is not the only one that is looking at the segment. Step, a children's banking app, took out a $300 million credit line to build out a product for young users. A new raft of family focused safety features was added by Greenlight. It was originally built for younger users, but others have expanded into that age group.
The emergence of a new sector is what it is. We hope to create a new segment called youth banking in the next two to three years. Funding and debt raises are the next steps in the story. It is getting us to the point of becoming household names for all of us.
Chris Sugden, managing partner, said in a statement, "We knew the company was poised to make a global impact by making money easy to understand and fun for the younger generation and their families." We are excited to fuel GoHenry's rapid growth into continental Europe and to teach young people financial literacy with practical tools.
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