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Venture capital’s wild fintech party is now inviting minors, too. 

Greenlight, a startup that offers debit cards and investing for kids, has raised a $260 million Series D at a valuation of $2.3 billion, nearly doubling the unicorn valuation it received in a $215 million fundraise just last September. Andreessen Horowitz led the latest round, which closed last week, joining investors including TTV Capital and Canapi Ventures (which co-led Greenlight’s Series C), Wells Fargo Strategic Capital, Fin VC, Owl Ventures and Liontree Partners. 

CEO Tim Sheehan says the money will go to accelerating marketing to parents and to hiring 300 more employees to build out new features for the app, which tripled revenue and customers last year. “It’s been a whirlwind. I’m kind of blown away by it all, to be honest,” says Sheehan, 51. “It feels like 10 years, but it’s been just four.”

In the first four months of 2021, venture capitalists have thrown $26 billion at fintechs across more than 1,000 deals, compared to $43 billion during all of 2020, and just $2 billion a decade ago, according to private markets research firm PitchBook’s data. Greenlight’s $260 million round is the 25th largest of the year—Robinhood’s $3.4 billion February financing featuring Andreessen tops the list, the data shows.

Greenlight aims to teach kids the basics of personal finance, setting them up to build future wealth. “It’s not magic,” says Sheehan, who directed Yahoo Finance during its early dot-com bubble days and has four kids of his own. “It’s really just information and experience.” The startup’s cornerstone product is its debit card, monitored and managed by parents. Features like chore tracking, automatic allowances and savings goals are also popular. The app aims to instill good habits; after the pandemic hit, kids’ charitable giving through the app spurted 25% in just one month.

Greenlight spent much of 2020 working on two new projects. In October, JPMorgan announced it had partnered with the company to incorporate features like allowances and spending management in its new checking account for kids as young as six years old. 

Then in January 2021, Greenlight released its investing platform. Loosely resembling a Robinhood for those still too young to vote, it allows kids to research stocks using vetted resources within the app and to propose investments to their parents, who can then approve or decline them. Young Greenlight investors typically buy fractional shares—the average trade is $20—and top picks include Apple, Microsoft and Tesla. Sheehan is mum on the number of families using Greenlight to invest, but says sign-ups have been double company projections. 

Greenlight’s 3 million household customers pay subscription fees, driving the bulk of revenue. Families with five kids or fewer pay a total of $4.99 per month for Greenlight’s core offerings—debit card, chores, etc.—or up to $9.98 per month to include investing and identity theft protection. The app has a few other fees sprinkled in. Parents can purchase a second subscription for additional children beyond their fifth, and they can opt to print their kid’s face on their debit card for a one-time $9.99 cost. Greenlight’s debit card is in Mastercard’s network, so the company also receives interchange fees when purchases are made with the card.

While helicopter parents looking to closely monitor and control a child’s spending are logical Greenlight customers, Sheehan says the company has also seen “strong interest” from parents who might not score so well themselves in a financial literacy test. 

But Wendy De La Rosa, cofounder of behavioral finance nonprofit Common Cents Lab, says that paid personal finance apps will be a tough sell for lower-income parents—especially with features like allowances. “Because there are all these systematic barriers, if you’re asking someone who’s already financially constrained to pay for a budgeting app for your kids, now I have to think about it, that’s a spending decision that I have to say yes to,” she says, “Versus if I’m higher income, of course the answer is yes.” 

While new digital banks have been popping up all over, competition in kid banking is thinner and relatively new. One major competitor, though, is Step, which offers a secured Visa card and peer-to-peer payment platform for teens and is reportedly raising VC money at a $1 billion valuation. The startup markets to the 13-18 year-old crowd, rather than their parents, and it doesn’t charge a monthly fee. Thanks in part to a splashy TikTok marketing campaign featuring Charli D’Amelio, Addison Rae and other young influencers, over 1 million teens signed up for Step accounts within four months of its launch last September. Digital bank Current, which had an early focus on teens, just announced an Andreessen-led $220 million Series D that tripled its valuation to $2.2 billion—though its CEO says roughly 90% of the business is now focused on adults.

M&A opportunities might be fueling interest in the space, says PitchBook analyst Robert Le. “It seems like their selling point to VCs is ‘we can build a business and a customer base that is attractive to the larger players, and we will get acquired, and that would be your exit opportunity.’” 

Andreessen general partner David George, who led the round, says he spent a year and a half actively pursuing an investment in Greenlight before it finally came to fruition. George points to Greenlight’s rapid customer growth, and says he thinks it has the potential to grow as large as some other fintechs backed by his firm— a portfolio including Robinhood, Affirm and Plaid. “The legacy banks are not serving this space well,” he says.  

Business aside, budgeting tools for kids and teens could help create better financial environments for a generation growing up amid meme stocks and soaring student loans. 

“My hope is that we’re creating a culture where people are much more open to talk about money,” De La Rosa says. “It shouldn’t be this secret shame that people have.”