Copper - Banking Built for Teens

Smart Money Habits for the Next Generation

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This week’s Startup feature is getcopper.com. Copper is the “knowledge bank” built to help teach teens smart money habits.

Company & Team Introduction

Copper is a banking startup for teens with the ambitious goal of empowering the next generation to be financially successful. The company was founded in 2019 by serial entrepreneurs Stefan Berglund and Eddie Behringer. Previously, the duo started the crowdfunding platform Snap! Raise, which gives schools, groups, and organizations the toolset required for a successful fundraiser. Berglund and Behringer attribute much of Snap! Raise’s success to the company's close relationships they established with high schools, leading them to work with millions of teens and parents. Strong industry experience coupled with how underserved teens were by the traditional banking system: slow, terrible user experience, lack of transparency behind products, and no educational content. The founders knew they were uniquely positioned to capitalize on the opportunity to build a bank designed to teach and protect kids while they learn strong money habits. Copper has incredibly experienced founding team alums from PayPal, Intuit, Stripe, and Microsoft. The company is headquartered in Seattle, Washington and has grown its team to ~49 employees.

Product Overview

Copper’s product takes a unique approach to neobanking: opening a checking account for parents and allowing anyone over the age of 6 to connect to the adult’s checking account and receive a debit card. Copper gives kids and teens the tools they need to create healthy money habits, including spending, saving, moving, and managing their hard-earned money, instilling strong financial habits they will carry with them for the rest of their lives. The company secured a key strategic partnership with Mastercard, allowing Copper cardholders to make purchases in person or online at any of the over 37M merchants that accept Mastercard. Parents can easily put money for allowances into their children's accounts and monitor their spending habits. The company has also invested over a million dollars into its financial literacy guides that teach teens everything from budgeting, investing, saving, credit, and earning. Copper customers also enjoy free ATM services from over 55,000 AllPoint ATMs. Copper is a financial technology company; banking services and FDIC account insurance are provided through their banking partner, Evolve Bank & Trust.

Total Addressable Market

The total addressable market for neobanks is easily one of the largest in the world. According to research from GlobeNewswire, in 2023, the neobanking industry was already estimated to be as large as ~100B and is forecasted to grow at a staggering 49% compound annual growth rate through 2033, inflating the market opportunity to north of 5.3T.

Business Model & The Numbers

Copper uses a simple 2-tier subscription business model with pricing starting at $5/month, which gives access to 2% yield on savings, their built-in financial education, instant 2P2 transfers, Copper debit card, spend monitoring notifications, no overdraft fees, hidden fees, or credit checks, smart savings and round-ups. The second tier is their investing tier, priced at 8$/month and unlocks features such as 5% savings yield, “investing for kids” where diversified portfolios teach kids the basics of investing, and priority support.

Traction

According to sources at Copper, the company’s growth has primarily been driven by organic word of mouth, with ~60% of new customers coming via WOM at the time of their Series A. Copper is now the bank of choice for over 2M teens and is growing fast. The company has an impressive 4.9/5 star rating from over 60,000 app/play store reviews.

Competitors

Any enormous, high-growth market opportunities will be riddled with competition trying to capture a piece of the pie, and with a potential 5B market opportunity ahead, the competitive landscape for youth-focused neobanks is no different. Here are some of the main competitors to Copper:

Greenlight - Founded in 2014 by Tim Sheehan and Johnson Cook, Greenlight is a financial technology company built to help parents monitor their children’s finances with many similar features to Copper’s, including a debit card for parents to monitor their kid’s spending habits and a digital/mobile-first experience, no hidden fees, etc. Compared to Copper’s debit card offering, Greenlight’s product is more restrictive, allowing parents more control over their spending, setting spending limits at specific merchants, restricting ATM access, and even blocking the ability to transact at certain stores. The more restrictive features are due to the market Greenlight targets, which is child/preteen-aged customers, which led the company to a more protection-based product rather than Copper’s education-based approach. Greenlight monetizes its users through a monthly subscription ranging from $5-15/month depending on the chosen plan, which has helped the company grow to over 100M in revenue in 2021 and has had over 6M kids and parents using Greenlight. The company, based in Atlanta, Georgia, most recently raised a massive 260M Series D round at a whopping $2.3B valuation and has a 4.8/5 star rating from over 370,000 reviews from the app store.

Step - Founded in 2018 by CJ MacDonald and Alexey Kalinichenko, Step is another leading financial technology company designed to make banking accessible for teens. Targeting the same market segment as Copper, the company's products share many similar features, including early direct deposit, an easy-to-use app, Free access to 30,000 ATMs nationwide (compared to Copper’s 55,00), etc. The difference between the two offerings is their partnerships and credit-building abilities, with Copper working with Mastercard and Step working with Visa. Step’s partnership with Visa may serve them well as they have the largest merchant network in the world at 44M merchants, compared to Mastercard’s 37M. The other difference is that Step’s card allows users to build up their credit with a secured credit card that only allows users to spend money in their account. In contrast, Copper’s card is a Mastercard debit card that allows for both online and offline transactions but doesn’t get into the complexity of credit, which could be problematic if 18-year-olds are given high credit limits to deploy without understanding how the credit system works. Step also has a different business model where their base card is free, and the company monetizes via interchange fees from card networks. Step has been talked about by many influencers/celebrities, such as Charli D’Amelio, Eli Manning, Justin Timberlake, and Will Smith. The step most recently raised an enormous $100M series C round with a list of big-name investors, including Coatue, Stripe, and Steph Curry, among others. The company is headquartered in Palo Alto and has a 4.7/5 star rating from 64,000+ app store reviews.

Funding

Copper has raised 3 funding rounds since being founded in 2019. Copper first tapped the capital markets by raising a 4.3M seed round at an undisclosed valuation in 2020, then extending the round in 2021, raising an additional 9M from including PSL Ventures, who led both funding rounds along with participation from high-profile firms like Maven Capital, Index Ventures Scout Fund, and Arnold Ventures as well as fintech-focused funds such as Clocktower Ventures, Launchpad Capital, Fiat Ventures, and Financial Venture Studio, bringing Coppers total seed funding to 13.3M. After seeing Incredible early traction less than a year after wrapping their seed funding efforts, the company raised a massive 29M series A. Fiat Ventures stepped up to lead the round, and the company received follow-on investments from existing investors in addition to notable new firms such as Index Venture Partners, Panoramic Venture Partners and Invesco Private Partners.

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