Carlo Kobe and Scott Smith believed so much in the need for a debit card product designed specifically for Gen Zers that they dropped out of Harvard and Cornell at ages 19 and 21, respectively, in 2021 to create a startup called Whistle.
The couple wanted to go beyond creating a debit card for the younger generation. They wanted to make using the card a way to build credit and become more educated about finances in general and eventually be financially independent. The best way to do this, they decided, was to make it an AI budget product at its core and offer financial literacy lesson games presented in “a fun and interactive quiz format.” Its target demographic is college students, ages 18 to 24.
Uniquely, the duo also decided to build their own infrastructure from scratch rather than, as they put it, “becoming a patchwork quilt of fintech SaaS vendors.” Also, given all the recent turmoil in the world of banking-as-a-service (BaaS) startups, Fizz has long since chosen to have a direct banking partnership, rather than offering its services through an intermediary or third party, of BaaS.
They spent their first two years building a technology stack and a partnership with Lead Bank, the Kansas City bank that was acquired by ex-Block executive Jacqueline Reses in 2022 before Fizz launched its debit card to the public in early 2023.
Now Fizz is announcing exclusively to TechCrunch that it has raised $14.4 million in seed funding led by Kleiner Perkins, with participation from SV Angel, Y Combinator, New Era Ventures and the founders and operators behind multiple unicorns, including Handshake, Postmates and Public.com. The startup passed the Y Combinator Summer 2021 cohort.
In the past 12 months, the couple said, Fizz has grown from zero to “tens of thousands” of customers. Its offer is available to students at more than 300 colleges and universities, including all Ivy League schools and every top 25 school as ranked by US News & World Report. Fizz, which this year is expected to top nine figures in annual card volume, the founders say, works directly with schools. It also uses campus ambassadors and TikTok to promote its offering.
Fizz is a portmanteau acronym of eatfinancial Idependency for Gen G, with an extra Z added for punch (and not to be confused with another startup of the same name which is a social network for students). The 11-person team consists of senior engineers and designers from companies such as Meta, Microsoft and Amex. It primarily competes with cards from major banks like Discover, Capital One and Bank of America, as well as Rocket Money and Credit Karma in the budgeting and AI feature set.
German immigrant Kobe (CEO) and Smith, who is originally from Detroit, said they were driven to start Fizz by their own experiences as young students.
“I couldn’t get a credit card because my parents couldn’t cosign,” Kobe recalls, “and I didn’t want to put down a big down payment. And since I didn’t have an established credit history, I was turned down over and over again.”
At first he thought it was an international student problem, but then realized it was a general problem for that demographic.
Scott points out that New York-based Fizz began offering students a different on-ramp to building credit.
“Students are a uniquely homogeneous segment. And if you ask any of them, they’ll tell you they’re credit card averse, but they’re not necessarily credit averse,” he told TechCrunch. “So maybe half of them might know they need to build credit vaguely and the other half may not know they need to build credit. So our perspective says to them, “Okay, you need credit to rent an apartment and get a car and even one day get a mortgage.”
Knowing that this customer group needs not only credit, but the tools to learn to use it wisely, Fizz offers a range of financial literacy content, as well as budgeting software and other assistance.
“It’s not like our cardholders just have a payment device. they have access to budgeting tools, savings tips and a one-on-one financial advisor,” Scott said.
The couple is also proud to have launched the Fizz product with two direct banking partnerships. In addition to Lead Bank, it also works with Mastercard and credit bureaus.
“We made our own ledger. We created our own underwriting methodology and got permits,” Kobe said. “I think in fintech you have to do the hard part. And we did that, and I think it’s served us very well.”
The company makes money primarily from exchange revenue and from partnering with other brands it recommends (in some cases, with discounts) and optional subscription products. Its credit building offer is free.
The new capital will go largely towards expanding and building its product roadmap, as well as continuing to hire in sales, marketing and engineering.
“There are a lot of AI products that we want to release,” Smith said.
Kleiner Perkins partner Ilya Fushman, who joined Fizz’s board as part of the financing, said his firm first invested in Fizz when it joined YC’s team in 2021. Many people are getting their first credit cards on college campuses, he said, including his own.
“This is a time when consumers are moving away from home and becoming financially independent. Unlike traditional credit cards with hidden fees and high interest rates, Fizz offers a credit limit based on spending patterns without requiring credit checks, co-signers or security deposits,” he told TechCrunch. “Most entry level financial products are not that good. They typically have low limits, high fees, few discounts, require co-signers, and lack effective guidance for financially independent young adults on their journey. “
Fizz is one of several fintechs aiming to serve the expanding Gen Z market. For example, Frich, a financial education and social education community for Gen Z, just raised $2.8 million in seed funding.
Also in January, Alinea Invest, an AI-powered wealth management fintech app aimed at Gen Z women, raised $3.4 million in seed funding ahead of the launch of an AI virtual assistant to help users with investment decisions. their needs. And Bloom, a zero-fee equity investment tool for teenage investors, emerged from stealth last July, announcing it had reached 1 million downloads after launching in February 2022. Meanwhile, in March, Onyx Private with Miami-based Y Combinator-backed digital bank that provided banking and investment services for high-earning millennials and Gen Zers has announced it is ending its banking operations and shifting to a B2B model.
In a similar vein, and perhaps to a lesser degree by comparison, there’s Copper, which is really geared towards teaching teenagers about finances, but which has struggled with its debit card offerings due to the chaos in the BaaS industry. There’s also Step, a digital banking service aimed at teenagers and young adults backed by NBA star Stephen Curry, and Current, which started life as a parent-controlled teen debit card but over time expanded to offer other services.
Want more fintech news in your inbox? Subscribe to TechCrunch Fintech here.
Want to get in touch with a tip? Email me at maryann@techcrunch.com or send me a message on Signal at 408.204.3036. You can also send a note to the entire TechCrunch crew at tips@techcrunch.com. For more secure communications, click here to contact uswhich includes SecureDrop (instructions here) and links to encrypted messaging applications.
