Savings App Guac Launches Equity Crowdfunding Campaign
Over the past few months, the FinTech industry has seen a slew of funding rounds — including some that have climbed even after their original announcement. While these traditional venture capital-led rounds are certainly the norm, they aren’t the only way for startups to raise funds. Case in point: this week, New World Savings, Inc., which operates the app Guac, announced that it was seeking seed funding via the equity crowdfunding platform Equifund CFP. Currently, shares of the company are going for $.50 (although the minimum investment is $100) with the total valuation coming in at $5.3 million. At press time, Guac’s campaign was nearing $800,000 in committed funds from 447 individual investors. In all, the app is looking to raise $1,070,000 via their crowdfunding efforts.
Guac is a digital banking and savings app that allows users to automatically set aside a portion of their money for savings. Once they open an account, customers can dictate what percentage of their spending they’d like Guac to transfer to an FDIC-insured savings account. For example, a rule could be implemented where anytime a purchase of up to $100 is made, 5% of the amount spent is also added to an earmarked fund. In addition to this micro-savings set-up, the app plans to introduce an “experience marketplace” where users can book travel and more through the app. It also teased an upcoming rewards program and cashback platform.
As part of their pitch, Guac notes that their target market — Millennials — make up the largest generation in U.S. history, amounting to 83 million people. The group will also account for three-quarters of the workforce come 2025 and hold a combined income of $8.3 trillion. In terms of monetization, the company points out that it earns 1.5% APY from funds it deposits on customers’ behalf and charges users a $.99 fee for transferring funds back to their checking accounts. Additionally, they state that they’ll earn a 20% commission on bookings made through the Guac Marketplace it’s rolling out soon.
Explaining the inspiration and intent behind Guac, New World Savings founder and president Scott Armstrong said in a statement, “Millennials are all about the experience economy. They place a higher value on travel and life experiences than previous generations. However, a large percentage of Millennials live paycheck-to-paycheck. This means they have trouble saving up for things they want to do.” Armstrong continued, “We created Guac to help solve that problem. Our percentage-based savings technology helps our users meet short-term savings goals faster and with more freedom than other micro-savings apps.” Elsewhere, Equifund CFP’s founder and CEO touted Guac’s decision to turn to equity crowdfunding (and Equifund specifically), stating, “We’re proud to announce the launch of a Reg-CF offering for New World Savings, Inc. and its lifestyle banking app named Guac. Traditionally, seed-level investment opportunities in the fintech space are reserved for venture capital and private equity firms. We’re very excited Guac chose to open its doors to the general public at this early stage, and list with Equifund CFP.”
To be sure, Guac/New World Savings Inc. is not the first FinTech to go the equity crowdfunding route nor is it likely to be the last. Regardless, it will be interesting to see how the company performs following this seed round and whether it turns to VC funding for subsequent raises. Ultimately, with multiple fundraising options now available to startups, the FinTech sector promises to only grow larger and more diverse from here.