As millennials continue to grow and mature, so does their bank accounts. The generational cohort — which now outnumbers baby boomers in the U.S. — will collectively spend more than $200 billion each year starting in 2017.
Savvy startups targeting this group have recently achieved highly successful funding rounds, thanks to their early success.
These three next-gen companies have attracted major VC interest by helping millennials save, invest, or simply spend their cash.
Who’s investing: PayPal, Rakuten
What they do: A mobile micro-investment platform
What they do differently: A simple app that makes it easy to invest
Acorns connects to users’ bank accounts, automatically investing “spare change” into a growth fund every time they make a purchase. Millennials are a cost-conscious generation, opting for thrifty purchases compared to Gen Xers and boomers.
The app is huge among millennials making their first foray into investing. It uses simple and jargon-free language, rewards referrals with cash and, most importantly, is free for students or anyone between 18 and 23 years old.
Who’s investing: IVP, Index Ventures
What they do: Cosmetics and skincare products
What they do differently: Built a beauty brand for, and by, connected women
When a company in an established category like cosmetics is reporting 600 percent sales growth in a year, they must be doing something right.
Glossier, an online-only makeup company, established its empire in the world of beauty blogging, Instagram selfies, and whimsical hashtags.
Glossier began as a fashion blog that featured interviews with models, celebs and occasional entrepreneurs as they spilled their beauty secrets.
The company frequently crowdsources ideas for new products, engages customers on platforms like Slack, and has a horde of volunteer brand ambassadors.
Who’s investing: SpeedInvest, Global Founders Capital
What they do: A money management app
What they do differently: Targets young people by not letting them spend more than they have
Fintech startups for students and millennials are becoming a crowded space, but now backed by several millions of dollars in seed funding, Loot seems poised to capture a good chunk of that crowd.
Loot’s website promises “A new banking experience,” and the CEO and founder is just 23 years old.
The startup — which saved itself millions by opting not to apply for a banking license — is able to do things traditional banks can’t do. Using a prepaid credit card, users are shown exactly how much they spend, how much they can spend, and how much they should spend to meet their goals. The interface is intuitively designed and updates instantly.
The next step for Loot is to offer targeted discounts to help its cost-conscious consumers save even more dough, making it less a strictly fintech app than an e-commerce one.