Carlo Corby and Scott Smith believed so strongly in the need for a debit card product designed specifically for Gen Z that they dropped out of Harvard and Cornell University in 2021, aged 19 and 21, respectively, to found a startup called Fizz.
The duo wanted to go beyond creating debit cards for younger generations, to empower them to use the cards to build credit, improve their general financial knowledge, and ultimately achieve financial independence. They decided the best way to do this was to offer a gamified financial literacy course delivered in a “fun, interactive, quiz format,” with an AI budgeting product at its core. Their target demographic is college students aged 18-24.
Uniquely, the duo decided to build their own infrastructure from the ground up, rather than, in their words, “becoming a patchwork of fintech SaaS vendors.” Also notable, given the recent upheaval in the Banking-as-a-Service (BaaS) startup space, Fizz long ago opted to partner with banks directly, rather than offering its services through an intermediary or third-party BaaS.
The company spent the first two years building out its tech stack and partnering with Reed Bank, a Kansas City bank that was acquired by former Block executive Jacqueline Recess 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 of several unicorns, including Handshake, Postmates and Public.com. The startup was part of Y Combinator's summer 2021 cohort.
In the past 12 months, Fizz has grown from zero to “tens of thousands” of customers, the pair said. The company's service is available to students at more than 300 colleges and universities, including every Ivy League school and every school in the top 25 of U.S. News & World Report's rankings. Fizz expects to hit nine figures in annual card issuance this year, the founders said, and is partnering directly with schools. It's also using campus ambassadors and TikTok to promote the service.
Fizz is an acronym for Gen Z Financial Independence, with an extra Z for extra punch (not to be confused with another startup of the same name, a social network for college students). The 11-person team is made up of senior engineers and designers from Meta, Microsoft, Amex, and more. Its budgeting and AI feature set primarily competes with cards from big banks like Discover, Capital One, and Bank of America, as well as Rocket Money and Credit Karma.
Kobe (CEO), a German immigrant, and Smith, a Detroit native, said they were inspired to start Fizz by an experience they had as young college students.
“I couldn't get a credit card because my parents wouldn't cosign,” Kobe recalls, “and I didn't want to put down a big deposit. I had no credit history, so I kept getting turned down.”
He initially thought this was an issue for international students, but then realised it was a common problem for this age group.
Scott noted that New York-based Fizz aimed to give college students a new gateway to building credit.
“College students are a very homogenous demographic. If you ask any of them, they'll say they hate credit cards, but they don't necessarily hate credit,” he told TechCrunch. “So maybe half of them know vaguely that they need to build credit, but the other half doesn't know that they need to build credit. So our approach is to tell them, 'You need credit to rent an apartment, you need credit to buy a car, and maybe even get a mortgage someday.'”
Recognizing that this group of customers needs not only credit but also the tools to learn how to use it wisely, Fizz also offers a suite of financial literacy content, as well as budgeting software and other assistance.
“Our cardholders don't just have a payment device, they get access to budgeting tools, savings tips and one-on-one financial advisors,” Scott said.
Image credit: Fizz
The duo are also proud to have launched Fizz's product in direct partnerships with two banks, Lead Bank, as well as Mastercard and credit reporting companies.
“We built our own ledger. We built our own underwriting methodology. We got licensed,” Corby said. “I think in fintech you have to do the hard part. And we did that. And I think that served us really well.”
The company derives revenue primarily from interchange revenue, as well as from partnerships with other brands it endorses (sometimes at discounts) and optional subscription products. Its credit-building services are free of charge.
The new funding will be primarily used to scale the business, develop the product roadmap, and continue hiring for sales, marketing and engineering teams.
“We have a lot of AI products we want to release,” Smith said.
Kleiner Perkins partner Ilya Fuschman, who joined Fizz's board as part of the funding, said his firm first invested in Fizz when it joined its YC cohort in 2021. He said many people, including himself, get their first credit card on a college campus.
“Now is the time for consumers to move out of their homes and become financially independent. Unlike traditional credit cards with hidden fees and high interest rates, Fizz requires no credit checks, cosigners or security deposits and offers a line of credit based on spending patterns,” he told TechCrunch. “Most entry-point financial products aren't much better – they typically offer low limits, high fees, few discounts, require cosigners and lack effective guidance for adults just starting to become financially independent.”
Fizz is one of several fintech companies looking to serve the expanding Gen Z market. For example, Frich, a financial education and social community for Gen Z, just raised $2.8 million in seed funding.
Also in January, Alinea Invest, a fintech app offering AI-powered wealth management targeted at Gen Z women, raised $3.4 million in seed funding ahead of the release of a virtual AI assistant to help users with their investment needs. And Bloom, a zero-fee stock investing tool aimed at teenage investors, emerged from stealth in July last year and announced it had achieved 1 million downloads after its February 2022 launch. Meanwhile, in March, Onyx Private, a Y Combinator-backed Miami-based digital bank that offered banking and investment services to high-income millennials and Gen Z, announced it would close its banking operations and pivot to a B2B model instead.
Similar, but perhaps less so in comparison, are Copper, which focuses on teaching teenagers about money but has run into problems offering debit cards due to turmoil in the BaaS industry, Step, a digital banking service for teens and young adults backed by NBA star Stephen Curry, and Current, which started as a parent-controlled debit card for teens but has expanded to offer other services over time.
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