Cleo Raises $44M Series B to Expand AI Financial Assistant

Cleo, the financial platform originating in London and now with the United States as its primary user base, has secured $44 million in Series B funding.

EQT Ventures spearheaded this funding round, which was finalized earlier in the year. Existing investors Balderton Capital, LocalGlobe, and SBI also contributed to the investment.

These investors join earlier backers including Entrepreneur First, Taavet Hinrikus, Matt Robinson, Errol Damelin, Niklas Zennström, Alex Chesterman, and Ian Hogarth – prominent figures within London’s technology investment landscape.

Focused on serving “Gen Z” customers, Cleo operates with a significant goal: to improve global financial wellness. Its app, powered by artificial intelligence and machine learning, links to users’ bank accounts and provides proactive financial guidance and insights, including helpful reminders, to assist in managing expenses. The long-term objective is for Cleo to positively influence users’ financial habits.

The core concept is that Cleo can function as an alternative to traditional banking apps, enhancing financial well-being through a more approachable and conversational interface. Furthermore, as Cleo’s founder, Barney Hussey-Yeo, emphasizes, the company can achieve this without the same overhead or conflicting interests as a conventional bank.

The initial premise, established in 2017, was that a combination of data analysis and machine learning, presented in an engaging and gamified format, could attract and retain younger users. The expectation was that consistent engagement with the app would provide enough value for users to subscribe to premium services or utilize other financial products offered by Cleo, either currently or in the future. With a registered user base of 4 million – 96% of whom are located in the U.S. – the initial phase is proving successful.

Hussey-Yeo explains that this new funding provides the company with the resources to pursue ambitious product development initiatives aimed at improving the financial standing of its users. “[These initiatives] may not all succeed, but even a single successful outcome could significantly reshape some of the most challenging areas within financial services.”

The company also intends to expand its operations within the U.S., specifically by growing its executive and product teams in San Francisco.

“Upon launching in the U.S., it quickly became clear that it would be our most important market,” states the Cleo founder. “We were adding approximately 1,000 users daily in the U.K. at that time. Within [only] one week in the U.S., we reached 10,000 daily sign-ups and continued to grow.”

Hussey-Yeo credits much of this success to the superior banking APIs available in the U.S., particularly Plaid, which he says “substantially increased” conversion rates and reduced customer acquisition expenses. “Combined with a larger potential market, this focused our efforts entirely on achieving success in the U.S. first. This competition is still ongoing.”

Hussey-Yeo confirms that Cleo will continue to offer a free version “because everyone deserves the ability to make informed decisions about their finances.” The premium version, priced at $5.99 per month, is designed for those who “require additional support,” offering features like gamified savings tools and enhanced credit score improvement with personalized guidance. Premium subscribers can also access a $100 salary advance to avoid expensive bank overdraft fees.

Cleo reports a 400% increase in revenue over the past year, and Hussey-Yeo indicates the company now generates over $10 million in annual recurring revenue (ARR). Demonstrating improved financial efficiency, the cost of acquiring a new user is now less than $2, with the majority of users joining organically.

“Therefore, we are not prioritizing growth at any cost,” he says. “We have dedicated the last 12 months to reducing our payback period to under 12 months, which is an unusual accomplishment at this scale for a fintech company.”

A noteworthy aspect of Cleo’s mission and the distinct “personality” of its chatbot is that the challenges it addresses may be rooted in behavioral science as much as data science. Hussey-Yeo concurs.

“This is the origin of the conversational interface concept,” he explains. “I realized that complex issues could be simplified into language accessible to everyone, and even enjoyable to interact with, ultimately leading to behavioral changes.”

“Currently, we have a strong machine learning team, but equally important are our behavioral researchers and writers. We believe this combination is what sets Cleo apart and, hopefully, will enable us to become the financial advisor for a billion people.”