Copper Banking Secures $9M Funding to Target Teen Customers

Copper Banking Secures $13.3 Million in Seed Funding

Copper Banking, a digital banking platform designed for teenagers, has announced the completion of a $13.3 million seed funding round.

Investment Details

PSL Ventures, the venture capital arm of Pioneer Square Labs, spearheaded a $4.3 million investment in the Seattle-based company last year. This was followed by an additional $9 million contribution in the current year.

The fintech startup also received funding from a diverse group of investors, including Clocktower Ventures, Index Ventures Scout Fund, Launchpad Capital, Financial Venture Studio, Maven Ventures, Fiat Ventures, and Arnold Ventures.

Competitive Advantages

Eddie Behringer, CEO and co-founder of Copper Banking, highlights several key advantages that set his company apart.

Behringer and Stefan Berglund, the CFO, previously established Snap! Raise, a crowdfunding platform geared towards young people. This platform successfully raised over $90 million in venture capital.

Leveraging Past Success

The founders attribute Snap! Raise’s achievements to strong relationships cultivated at the high school level. They are now applying this same model to accelerate Copper’s expansion.

“Our prior experience involved working with millions of teenagers and their parents,” Behringer explained to TechCrunch. “This experience is a primary driver of our rapid growth. We are replicating a proven strategy – building partnerships within communities, a facet often overlooked in contemporary tech approaches.”

Financial Literacy Focus

Copper Banking distinguishes itself by integrating financial education directly into its services. This empowers teens not only to spend, but also to effectively manage their finances.

The app incorporates financial guidance designed to impart “essential money lessons for life,” according to the company.

Behringer added, “A notable feature allows teens to articulate their aspirations to Copper, which are then translated into achievable savings goals, fostering financial learning.”

Rapid Growth and User Base

Copper’s strategy is demonstrably effective. Launched earlier this year, the two-year-old startup has already surpassed 350,000 users.

Since its inception, Copper has experienced approximately 70% month-over-month growth, with roughly 70% of new users joining through “organic word of mouth,” as reported by Behringer.

The typical Copper customer is 15 years old and frequently refers friends, excluding siblings, to the platform.

Youth Ambassador Network

Mirroring the Snap! Raise model, Copper Banking utilizes a network of youth ambassadors to promote the platform within schools, clubs, and sports teams.

This approach results in reduced fees for teen customers and significantly lower customer acquisition costs compared to traditional banks, according to Behringer.

Addressing a Market Need

“During the growth of Snap! Raise, we recognized a significant gap in preparing the current generation for financial success,” Behringer stated to TechCrunch. “We observed that banks have established remarkably low standards for banking services for individuals under 18.”

Account Features

Copper Banking provides an FDIC-insured digital bank account with access to a network of 50,000 ATMs.

Teens receive a personalized Copper debit card, peer-to-peer payment capabilities, direct deposit options, and automated savings tools.

Parents are required to register their teens for an account and can link their existing bank accounts to provide a regular “teen salary” allowance. They also receive spending alerts and control features.

The platform also offers a co-parenting feature for separated parents in different households.

Future Plans

The newly acquired capital will primarily be allocated to the continued development of the banking platform and its associated products, as well as refining the company’s go-to-market strategy.

Copper is also actively expanding its team across multiple departments, including engineering, compliance, marketing, sales, and operations. The company currently employs around 25 individuals.

Investor Confidence

Geoff Entress, managing director and co-founder of PSL Ventures, emphasized the management team’s proven ability to scale early-stage companies.

“Their adoption rates, conversion to funded accounts, and referral metrics surpass most direct-to-consumer benchmarks, demonstrating Copper’s strong appeal to its target audience,” Entress noted via email. “As investors, these are the indicators we seek. We are confident that Copper Banking is well-positioned to guide the next generation of Americans towards improved financial well-being.”

Market Opportunity

Ben Savage, partner at Clocktower Ventures, believes the teenage market presents a compelling opportunity for neobanks, but stressed that “teens don’t want a banking solution imposed upon them by their parents.”

“Copper possesses the brand recognition, product offering, and go-to-market strategy to effectively address this need,” he stated.

Banking Services Provider

Copper Banking operates as a digital bank, with banking services provided by Evolve Bank & Trust.

While primarily focused on teenagers, individuals aged six and older can open an account with a mobile phone.

Competitive Landscape

The market for youth-focused banking services is becoming increasingly competitive. In April, Step secured $100 million in Series C funding, while Greenlight, a fintech company targeting parents with kid-friendly accounts, raised $260 million in a Series D round, nearly doubling its valuation to $2.3 billion.