💫 Heartcore Consumer Insights

Edition #65

Hi there,

Welcome to the 65th edition of Heartcore Consumer Insights. Curated with 🖤 every week by the Heartcore Team.

If you missed the past newsletters, you can catch up here. Now, let’s dive in!

Ecommerce Meets the Passion Economy - Investment Memo - Greylock

  • Over the last two decades, ecommerce has seen steady growth with the pandemic propelling ecommerce adoption forward by many years. U.S. ecommerce is on track to reach its first-trillion dollar year by 2022.

  • Despite this, high consideration purchases like golf clubs or ski equipment are still largely purchased in brick-and-mortar retail stores. That’s because if you’ve ever tried to buy something like skis online you know how tough it is. There’s an overwhelming number of options, and you spend hours reading reviews and checking out forums looking for guidance.

  • In the end, you may never actually make the purchase, or worse you may end up buying the wrong product for your needs.

  • While it’s an ambitious idea and has been tried before, there’s still a real opportunity to provide the best of in-store experiences with the convenience and selection of online shopping.

  • Enter Curated, an ecommerce platform where consumers shop with the help of free, unbiased advice from an expert.

  • For consumers, it’s not about speed, but about finding the right product with the help of a real human expert (no AI chatbots!). After a short quiz to understand what they’re looking for, consumers are connected with an expert who shares their first-hand knowledge to help them find the right product.

  • It can take dozens of messages back and forth with their experts before consumers purchase - but the time and relationship pay off. Consumers have left over 30k positive reviews, and the return rate for purchases on Curated is incredibly low for e-commerce (2%). Since their public launch in 2019, Curated has connected over 1M consumers with experts.

  • Curated is also part of the passion economy, where people can monetize doing what they love. Curated experts are people who truly enjoy what they do, with deep category knowledge, and are eager to help others pursue their passions. Today, Curated has around 1k active experts.

  • Brands have also embraced the platform, seeing Curated as a way to reach new customers and get insights about what experts recommend and what the consumer ends up buying.

Banking on Young People - Aika Ussenova

  • Financial apps for children, teens & young adults is a hot business right now.

  • Just this week, hot off the press (as you can see in the deal section below), Greenlight, Current, and Step raised $260M, $220M, and $100M respectively.

  • There is a big market, by one account there are 12M children in the UK aged between 5-19 and more than 70M under-18 in the US.

  • Despite similarities in the stated goals, teen banking apps are approaching growth very differently. There are several noticeable paths:

    1. Building junior banking within adult banking products: family banking is a feature that can have a strong customer retention pull. Neo banks see junior offering primarily as an enrichment of adult banking experience, rather than a new category. Revolut Junior is only available to existing premium subscription customers. The marketing message is also directed to parents: “Designed for kids, controlled by you”. As a side benefit, when children grow up, they could graduate to main account customers. By running a thin margin business on kids, neo-banks would acquire loyal customers very early.

    2. Starting with junior banking, but growing up with customers: Step and Current, are offering independent teen banking experience but plan to grow up with their customers. These companies advertise directly to teenagers, rather than to parents, using influencer power (Charli D'Amelio <> Step). They want to be primarily cool, as that’s what matters to teenagers. As such, their growth could be viral, and importantly cheap. Current started as a subscription teen banking app two years ago but now has a broader appeal with checking accounts, salary advances, free overdrafts, points, etc. Teen banking is still one of its pillars, but it is already building up features that would appeal to teens when they grow up. Step positions itself as a no fees account. Monetization will come from interchange today, and from lending later, as the founder said: “As teens grow up we want to grow with them. We will start offering products when they go to college, for example lending money to get books or computers.”

    3. Stand-alone junior apps: Greenlight in the US and GoHenry in the UK are both pioneers in child banking. Unique children features including spend limits, payment for chores, saving up for big purchases. Both companies position themselves as financial education providers dedicated to teaching kids financial literacy & delayed gratification. As an extension, both of these companies focus just on kids and don’t have adult banking companion offers. The limitation of such a business model is customer churn. Unlike adult banking with low churn and high retention (only 1-2% of customers in the UK switch their accounts annually), junior banking customers tend to grow up. So the churn in junior banking is by age cohorts, rather than in single percentage points.

🇪🇺 Notable European early-stage Consumer rounds :

  • Barkyn, a Portugal-based subscription service for pet food and telehealth, raises €3M with Five Seasons – link

  • Sesamy, a Sweden-based company that lets people purchase audio and ebooks online, raises €4M with GP Bullhound/Edastra - link

  • Cuckoo, a UK-based fast & simple broadband provider, raises $6M with RTP/JamJar - link

  • PortalOne, a Norway-based mixed reality gaming startup, raised $15M with Atari/ARRI/Founders Fund/TQ/Coatue - link

  • Yousician, a Finland-based music learning platform, raises $28M with True/MPL/Alexa Fund – link

  • Taster, a France-based start-up creating and operating online restaurant brands, raises $37M with Octopus/Battery /LocalGlobe/Rakuten/GFC/Founders Future & Heartcore 🖤 - link

🇺🇸 Notable US early-stage Consumer rounds :

  • Rapchat, a Columbus-based company democratizing mobile music creation, raises $2.3M with Adjacent/Sony/Base/Fulcrum - link

  • Backer, an S.F-based social savings platform that enables users to set up a tax-free 529 plan where family and friends can contribute, raises $8.4M with Crosslinks/Rally/Correlation/Expansion - link

  • Pachama, an S.F-based marketplace for forest carbon offsets, raises $15M with Breakthrough Energy/Climate Pledge/Lowercarbon - link

  • Small Door Veterinary, an N.Y.C-based membership-based veterinary care model, raises $20M with Toba/Pentland/Lerer Hippeau/Primary/Brand Foundry – link

  • Splitwise, a Providence-based cost-splitting app, raises $20M with Insight – link

  • Sesame, an N.Y.C-based direct-pay healthcare marketplace, raises $24M with Giant Industry/Coefficient – link

  • Ergatta, an N.Y.C-based maker of a connected rowing machine, raises $30M with Advance/Greycroft/Fifth Wall - link

  • Mighty Networks, an S.F-based platform designed to give creators and brands a dedicated place to start and grow communities, raises $50M with Owl/Ziff/Lion Tree - link

🔭 Notable later stage Consumer rounds :

  • Vivid Money, a Germany-based mobile banking app and digital investing platform, raises $73M with Greenoaks/Ribbit - link

  • Kaia Health, an N.Y.C-based digital therapeutics startup that uses computer vision technology for physiotherapy, raises $75M with Optum/Eurazeo/3VC/Balderton & Heartcore 🖤 - link

  • OpenClassrooms, a France-based education tech startup that offers certification courses to its members, raises $80M with Lumos – link

  • Step, an S.F-based digital banking service aimed at teens, raises $100M with General Catalyst/Coatue/Stripe - link

  • Diamond Foundry, an S.F-based maker of lab-grown diamonds, raises $200M with Fidelity - link

  • Current, an N.Y.C-based challenger bank that offers teen banking, raises $220M with a16z/Tiger/TQ/Avenir - link

  • Greenlight, an Atlanta-based banking app for kids, raises $260M with a16z/TTV Canapi/Wells Fargo/BOND - link

  • Capsule, an N.Y.C-based digital pharmacy, raises $300M with Durable/Baillie Gifford/T. Rowe/Whale Rock - link

  • Kry, a Sweden-based telehealth service, raises $312M with CPP/Fidelity  - link

🍭 Notable Consumer Exits

  • Sonder merges with SPAC Gores Metropoulos II Inc. Sonder is an S.F-based lodging company that decks out apartments and hotel rooms as hip short-term rentals with backers including Spark/Real/Greylock/Structure/Green Oaks/Fidelity – link

  • Nestlé acquires The Bountiful. The Bountiful is an S.F-based maker of nutritional supplements with backers including Foundation/Basis Set/Cavallo/Better Food/XFactor/YC - link

  • OVH Cloud’s founder acquires Blade. Blade is a France-based startup behind cloud gaming service Shadow, with backers including Serena/FSJ - link

🖤 Heartcore

Heartcore Consumer Insights is a weekly newsletter, covering notable consumer rounds and exits, as well as top content in the B2C space.