Stripe returns to back fast-growing US mobile bank Step

Stripe has once again participated in a funding round for Step, a US mobile banking start-up aimed at teenagers, which is also backed by a number of well-known stars.

Step has secured $100 million in funding in Series C round as it announced it has surpassed 1.5 million users less than six months after launching. Of these users, some 88 per cent said Step is their first bank account.

The start-up is aimed solely at the ‘pre-banked’ generation and aims to teach them financial literacy through its mobile app.

Stripe previously led a $22.5 million funding round for the company in mid-2019 with the Collison brothers and it participated in a $50 million fundraise late last year.

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Step’s mobile app provides users with access to a free bank account, secured spending card and a P2P payments platform allowing them to send and receive money instantly. Additionally, Step is the only banking platform currently available in the US that enables teens to start building a positive credit history before they turn 18 and does not charge fees of any kind.

The start-up was established by CJ MacDonald, who sold his company Gyft to First Data for more than $50 million in 2014, and Alexey Kalinichenko, a veteran of companies including Square, Google and Microsoft.

To date, Step has raised more than $175 million from investors.

General Catalyst led the latest funding round, which also includes several existing Silicon Valley investors.

Actor Jared Leto and NBA All-Star Stephen Curry also participated, joining a host of well-known names to back the company, including Justin Timberlake, Nas and Will Smith. Leading Irish tech executive Sarah Friar, formerly of Square and now chief executive at Nextdoor, is also an investor.

"Gen Z is flocking to modern financial solutions that can be easily embedded within their digital lives and Step has a unique model for how to do this right," said Kyle Doherty, managing director at General Catalyst.

“The team has built the elusive offering that teens want and families’ need, which has been validated by their incredible growth and market momentum,” he added.