Teen Banking Startup Step Takes In $100 Million In Series C Funding

Step has raised $100 million in Series C funding, the FinTech banking startup said in a news release on Tuesday (April 27). According to the company, its valuation has more than tripled in less than five months to just under $1 billion.

Led by General Catalyst, the round attracted some high-profile investors, including NBA All-Star Stephen Curry, actor Jared Leto and Dreamers VC, the fund founded by Will Smith. The company, which recently marked 1.5 million users in its first six months, will use the new funding to improve product infrastructure, add new features and hire for “a number of key roles.”

Step bills itself as a service geared toward teens and families, a notion borne out by the fact that 88 percent of the platform’s users say this is their first bank account. Users get access to a free, FDIC-backed bank account, a spending card and P2P payments platform to send and receive money instantly.

“Additionally, Step is the only banking platform that enables teens to start building a positive credit history before they turn 18 and does not charge fees of any kind,” the company said in the release.

According to Step, its research has found that teenagers value financial literacy but have rejected traditional banks “after being repeatedly underestimated and overlooked by these institutions. Instead, Gen Z is prioritizing FinTechs, and say they’re looking for a financial partner that is trustworthy, built for teens and fee-free.”

In an interview with PYMNTS’ Karen Webster late last year, Step Co-founder and CEO CJ MacDonald talked about the importance of financial literacy for young people. “Money is just one of those things where I think the more educated and equipped you are early, the better decisions you can make down the road,” he said. “And you can also prevent yourself from making costly mistakes. I mean, the average American doesn’t have $400 in emergency savings and pays $350 a year in banking fees. If we can help this next generation just ultimately be smarter and more educated as it pertains to money, I think we’ll all be better off.”

Step’s Series B funding round brought in $50 million, and also included some famous faces among its investors, such as Justin Timberlake and the pop duo The Chainsmokers.