Step, a finance startup aimed at teens, has raised $22.5 million in a funding round led by Stripe, according to a report.
Step builds mobile banking services for teens who are more comfortable with smartphones than bank visits.
“Schools don’t teach kids about money,” said CJ MacDonald, CEO and co-founder. “We want to be their first bank accounts with spending cards, but we also want to teach financial literacy and responsibility. Banks don’t tailor to this, and we want to be a solution teaching the next generation of adults to be more responsible with money in the cashless era. It was easy with cash to go to the mall, but now everyone is using their phone for Uber and more.”
MacDonald has a fairly successful pedigree when it comes to smartphone applications. His last venture, the mobile loyalty card app Gyft, was acquired by First Data.
Step will start in the U.S. with plans for eventual expansion. The first product will be banking accounts with payment cards, in collaboration with Mastercard and Evolve.
When Step launched in January, it only started with a waiting list. It already has about 500,000 names of potential users, which is one of the reasons it was able to raise the money.
The funding round also includes actor Will Smith’s Dreamers fund, Moat founders Jonah and Noah Goodhart, rapper Nas, Kevin Gould and others.
The company’s valuation was not disclosed, but it has raised about $30 million so far. MacDonald said his company is different from other similar firms because it engages the teenagers themselves, with the purpose of giving them a feeling of autonomy. However, accounts for people under 18 can still be monitored and controlled by parents.
“As teens grow up, we want to grow with them,” MacDonald said. “We will start offering products when they go to college – for example, lending money to get books or computers.”