Step Secures $100 Million in Series C Funding

The digital banking platform, Step, designed for teenagers and promoted by TikTok personality Charli D’Amelio, has announced the completion of a $100 million Series C funding round. This achievement follows a period of rapid expansion, with the service now boasting over 1.5 million users within its first six months of operation.

Investment Details and New Investors

This latest funding round was spearheaded by General Catalyst and closely follows Step’s previously announced $50 million Series B raise. The Series B was secured after the startup reached 500,000 users in just two months following its initial launch.

Existing investors, including Coatue, Stripe, Charli D’Amelio, The Chainsmokers, Will Smith, and Jeffrey Katzenberg, have continued their support. Additionally, Franklin Templeton joins Step as a new investor, indicating potential future expansion into investment services.

Actor and musician Jared Leto is also participating in this funding round. Furthermore, Step is officially revealing NBA All-Star Stephen Curry as an investor, a detail that was previously undisclosed. Former Square executives Sarah Friar, Jacqueline Reses, and Gokul Rajaram are also newly involved.

Strategic Growth and Capital Utilization

Kyle Doherty from General Catalyst will be joining Step’s board as a result of this investment. To date, Step has successfully raised over $175 million in funding.

CEO CJ MacDonald stated that the funds from the Series B round have not yet been fully utilized. However, he believes the additional capital will facilitate accelerated growth for the company.

“We have acquired over 1.5 million accounts in the initial six months. Currently, we are onboarding more than 10,000 new accounts daily, and we aim to extend this service to millions of households, empowering the next generation with financial literacy,” MacDonald explained. For context, Step was adding approximately 7,000 to 10,000 accounts per day at the time of the Series B funding.

“We aren’t necessarily in need of this capital,” MacDonald added. “Our primary focus is on speed to market, and we believe we can expedite our growth and enhance our infrastructure with these resources.”

Expansion Plans and Team Growth

The company intends to expand its team across various departments, including operations, engineering, product development, and design. The goal is to double the current team size of 65 employees within the next year.

Competition and Unique Positioning

Targeting the Teen Market

Step operates within a competitive landscape of mobile banking services geared towards younger users. However, it distinguishes itself by specifically targeting teenagers aged 13 to 18.

Through the Step app, teens can access an FDIC-insured bank account without incurring fees and obtain a secured Visa card to begin building credit before reaching the age of 18. The app also provides peer-to-peer payment functionality, similar to Venmo.

Growth Drivers and Marketing Strategies

Step’s rapid growth has been fueled by a combination of factors, including positive word-of-mouth referrals, strategic social media engagement, and a successful referral program that rewards new sign-ups. Collaborations with social media influencers like Charli D’Amelio and Josh Richards, alongside celebrities such as Justin Timberlake, have also contributed to its success.

The company anticipates that the announcement of Stephen Curry’s investment will further enhance brand awareness. Curry’s potential endorsement to his children could significantly influence public perception.

Future Outlook and Product Diversification

While the current funding is primarily focused on accelerating growth, Step is also planning for the future as its user base matures. The company intends to enter the credit and lending markets and eventually introduce investment options. The partnership with Franklin Templeton is expected to be valuable in this regard.

“Franklin Templeton is a globally recognized financial institution. As we contemplate expanding into investments and evolving with our customers, having a reputable brand like Franklin Templeton invested in this round demonstrates their confidence in our vision,” MacDonald stated.

Step’s funding announcement coincides with similar funding rounds for competitors Current and Greenlight, both of which focus on family-oriented financial services.