Fintech’s funding boom for the past decade has led to a flurry of new consumer startups tackling a wide range of money-related issues, from saving apps to investing platforms.
Should you download Robinhood, Stash, Public, Acorns or Truebill? The fintech craze creates confusion for consumers when it comes to figuring out which startup is the best to handle your money.
That clutter has created room for Venice-based Stackin’, a curated marketplace for fintech apps that today raised $12.6 million in a Series B funding round led by Octopus Ventures. According to CEO Scott Grimes, Stackin’ “wants to be the simplest entry point into finance” for millennials. Today’s raise brings the company’s total known funding to $19.6 million. Other investors in the company include Experian Ventures, Cherry Tree Investments, Dig Ventures, Mucker Capital, Unlock Venture Partners, Techstars and Wavemaker Partners.
How it works
Stackin’ uses text messaging to give money tips to young consumers, which it meets by advertising on platforms like TikTok, Snapchat and Instagram. Think of Stackin’ as a more friendly and less nerdy “robo-advisor” that sends you advice on how to save, and from time to time, recommends an app that you might enjoy in the fintech space.
“Sometimes you’ll get some education, sometimes we’ll send you something funny via text,” said Grimes. “So the text messages themselves are not always built for response. They’re built to keep you engaged. They’re built to teach you something.” Tips look like how to manage a stimulus check, or how to save $500 on your couch.
The texts for the first 30 to 60 days are tailored to how someone finds Stackin’. If users come in from a TikTok around investing, the first two months are around investing tips. After that time period, the knowledge becomes more general.
When Stackin’ has enough information on a user to see that they might be interested in opening an investment account, for example, they present to the user three options of platforms they can use.
Stackin’ added one million active users in a little over a year, up 500,000 active users from when it raised last July. It has sent more than 100 million text messages to date.
The easiest way to understand how Stackin’ makes money is to think of it as an advertising agent for other fintech brands. It’s yet another channel that Robinhood or Chime can use to market itself, and Stackin’ drives leads to younger customers. Stackin’ makes money when users either click into one of their product recommendations or download an app, depending on the contract. The company’s base rate is determined on a contract-by-contract basis.
Grimes said that the text messaging service, built atop Twilio, incurs “a lot of costs” for the company, which is not yet profitable. But he hopes that as the company captures more users, their recommendations will get better and revenue will increase.
Many fintech startups have a financial literacy component similar to Stackin’, but their education is only effective after a consumer decides to download their app in the first place. Stackin’s competitive edge is that it brings in potential customers to fintech before they are in the “download a robo-adviser” stage of their financial journey. Grimes describes them as the “pipes that port people around fintech.”
Success (and a shutter)
With the new financing and COVID-19, Stackin’ is doubling down on its text-messaging business and stripping the company of its other plays in the product field. In the fall, Stackin’ launched a new investment feature similar to Acorns to encourage users to invest. In June, it launched a no-fee checking and savings account feature in partnership with Radius Bank. The company recently ended its partnership with Radius Bank and will continue its small investing operations, an “unraveling” move that the CEO says was so “Stackin did not look like it competes with its customers.”
“As a referral product, we don’t even want the appearance that we’re trying to compete with the neo-banking space,” Grimes said. “Our core focus as we move forward is going to be 100% built around how we can be the most efficient company on the planet and use data to refer people into the products they need when they need them.”
Stackin’ has 18 employees, and will use the new funding to expand its messaging service, user growth and marketplace to the United Kingdom later this year.