gohenry Raises $40M to Empower Young People with Finance

Financial services firms have consistently recognized young individuals as a key demographic, though approaching them requires a thoughtful and responsible strategy. Successfully engaging this group can lead to long-term customer relationships. Currently, a company focused on developing services tailored for those under 18 is announcing a new round of funding, which it intends to utilize for continued expansion within the United States and the United Kingdom. GoHenry, offering a pre-paid debit card and a connected application for individuals aged 6 to 18, with parental control and funding capabilities, has secured $40 million in investment.

Edison Partners spearheaded the funding round, with additional contributions from Gaia Capital Partners, Citi Ventures (the investment division of Citi Bank), and Muse Capital.

GoHenry is not revealing its current valuation following this initial institutional funding. Previously, the company had obtained approximately $30 million through investments from individuals and equity crowdfunding. This has resulted in a shareholder base of around 5,000, with half of those shareholders being GoHenry customers.

The company’s progress is further highlighted by its substantial growth trajectory.

GoHenry currently serves 1.2 million members, encompassing both parents and children, and has experienced a doubling of its customer base each year for the past six years. The specific breakdown between parent and child members, as well as the relative performance of the UK and US markets, where the service is presently available, has not been disclosed.

Within the United Kingdom, GoHenry reported that parents allocated £98 million in allowance payments in 2019, with children earning over £2.2 million for completing household chores. GoHenry’s younger users collectively spent nearly £100 million, contributing to the UK economy. (The cards feature personalization with user names – for example, mine would say “GoIngrid” – a detail likely to appeal particularly to younger users.)

Notably, GoHenry achieved profitability in March of this year, a period when numerous businesses, including retailers, faced challenges due to decreased consumer spending related to the Covid-19 pandemic.

Banking with a Clear Vision

GoHenry was created to be more than just a financial service for young individuals; it was designed with a specific purpose in mind.

Historically, young people’s interactions with money have differed from those of adults, typically revolving around cash provided by parents or earnings from occasional jobs, alongside perhaps a savings account for gifts. Obtaining a traditional bank account or payment card as a minor was, until recently, exceptionally difficult.

However, today’s youth are just as likely as their parents to own a smartphone—and may even be more inclined to explore a diverse range of applications and services.

Founded in 2012 by Louise Hill, now the Chief Operating Officer, GoHenry recognized this widespread smartphone adoption as an opportunity to develop a financial service tailored for younger users. This service aims to serve as a foundation for financial literacy, helping young people develop responsible money management skills and understand the connection between work and income. While not a conventional bank account, GoHenry offers essential tools that replicate the core functions of the adult financial world—earning, saving, and spending.

According to Alex Zivoder, CEO of GoHenry, “For a long time, children have been excluded from the digital economy, and parents have lacked the resources to help their children build confidence with money and financial matters. GoHenry was the first to address these needs in 2012 with a pioneering financial education app and prepaid debit card that genuinely empowers children. In 2020, we reached three significant achievements: achieving profitability, a goal many B2C fintech companies pursue; securing $40 million in funding during the Covid-19 pandemic; and establishing partnerships with leading global investment firms. These accomplishments will all contribute to accelerating our expansion in the United States.”

The service centers around a prepaid debit card that provides parents with greater control than standard prepaid cards. Parents can add funds as an allowance, restrict where and how the card can be used, and set spending limits for specific timeframes.

Parents also receive reports detailing how the funds on the card are being utilized. The card cannot be overdrawn, preventing negative balances. Simultaneously, the child’s app allows them to check their balance and enables parents to assign tasks that, upon completion, “earn” the child additional money.

This service is offered at a cost of $3.99 per month following a one-month free trial, with additional fees potentially applying to certain transactions, such as those made internationally.

GoHenry is not the only company developing banking applications for individuals under 18. There has been a significant surge in new launches and funding for startups focused on this market. These include Step, a teen banking app that recently raised $50 million; Kard, which launched in France last year; Revolut, the challenger bank that introduced “Revolut Junior”; PayPal’s Venmo, which tested a payment card for teenagers earlier this year; and Current, which initially targeted teens but has since broadened its focus to other underserved demographics, having recently secured $131 million in funding.

However, GoHenry possesses distinct characteristics compared to these competitors. Beyond not being a full-service banking application, a notable aspect is GoHenry’s current lack of a strategy to retain customers once they reach the age of 18.

A company spokesperson stated, “Currently, our complete focus is on supporting children and teenagers aged 6-18 in gaining confidence in managing money and learning about finances.”

Within the retail banking sector—which often experiences high customer turnover—it is noteworthy, and somewhat unique, to see a company prioritizing strong relationships with young customers without necessarily aiming to capitalize on those relationships for future business.

“GoHenry is addressing the needs of millions of parents who want to raise financially responsible children but are currently lacking adequate solutions,” commented Chris Sugden, managing partner at Edison Partners. “We are excited to collaborate with Alex and the GoHenry leadership team as they progress in their growth and look forward to helping them achieve their goal of improving the financial well-being of children worldwide.” Sugden will be joining the board, alongside Dawn Zier, an experienced CEO and marketing professional.