The recent bull market created a new wave of investors as more and more people decided to make their first foray into the markets. a stepIt is a digital banking service geared towards teens and young adults, and it is one of the many companies that are making money serving these new investors. And while fates have taken a turn for the worse in the stock and cryptocurrency markets in recent months, Step is doubling down on its growth plans.
The company has just launched a crypto-investing feature for nearly 4 million users on its platform, CEO and founder CJ MacDonald told TechCrunch in an interview.
Step also announced today that it has borrowed $300 million in debt financing led by Triplepoint Capital and Evolve Bank & Trust. The new funding represents a large portion of the total $500 million raised so far, most recently in the 2021 Series C round from investors including Coatue, Stripe and angels like Charli D’Amelio and Jared Leto.
“We launched on September 30, 2020, during the pandemic, so we just passed the two-year mark,” MacDonald said.
While MacDonald declined to share any details about the company’s revenue, he said it has “growthed significantly since our launch” and noted that the cryptocurrency launch demonstrates how Step offers additional revenue streams to its business beyond its primary revenue source of exchange fees from a credit card product.
The first step is to release access to bitcoin on the platform and expect to have nearly 40 different cryptocurrencies added by the end of the month, according to MacDonald. Finally, the plan is to add NFT and DeFi tools like staking, MacDonald told TechCrunch in an April interview.
MacDonald said the show will also start in conjunction with a financial literacy platform that provides educational content for children and parents on the Step’s app. For kids under the age of 18 on the platform, parents have the ultimate say on how their money is allocated, although for Step customers over the age of 18 there will be no restrictions or restrictions on how much of their portfolio they can invest in crypto .
The company chose to launch its own crypto offering ahead of the stock investing feature, which McDonald said is currently working for Step customers and likely to launch before the end of the year.
Step is one of the many investment platforms that have recently entered the crypto world. Roboadvisor Acorns added crypto to its platform this year, and fellow startup Stack raised $2.7 million for its crypto-trading and education app for teens in September.
MacDonald said Stipe plans to use the new money to increase investment in two areas – product and people. Today the company employs more than 100 people, according to McDonald.
“We have some other products to launch and we have additional capital that helps set us up for long-term success… so it worked out in terms of timing and we are grateful for the opportunity. It allows us to basically expand the runway for the company to really take off. [achieve] MacDonald said.
When asked why Step is raising debt rather than equity, particularly in today’s high rate environment, MacDonald said the company is “very well capitalized today” and noted that equity is diluted while debt is not.
“We went from zero to one very quickly, and now we need to go from one to 10 and from 10 to 100 and just scale the business,” MacDonald said of the decision to withdraw the debt. He added that he believes economic conditions may force companies that are unable to raise new capital in the next 12 to 18 months out of the market, noting that Stipe’s new capital will help the team “put our heads down, build and control our destiny.”
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