Business

Brazilian fintech Z1 aspires to be Gen Z’s first and only digital bank

From the left: Thiago Achatz, Mateus Craveiro, Sophie Secaf, and João Pedro Thompson, the founders of Z1. Photo: Z1/Courtesy

Generation Z is usually described as impatient, revolutionary, and socially engaged. For the demographic cohort of people born between 1995 and 2010, the smartphone is practically an extension of their arm. Attracting this audience’s attention is a challenge for some traditional brands — and an opportunity for new entrepreneurs. One such case is Z1, a Brazilian fintech that offers a digital account linked with a prepaid card aimed at teens and young adults.

This Wednesday (24), the startup announced a $ 10 million Series A led by Kaszek and accompanied by MAYA Capital, Homebrew, Clocktower, and Mantis funds.

The company was founded by entrepreneurs João Pedro Thompson, Thiago Achatz, Mateus Craveiro, and Sophie Secaf in April 2020. The company offers a digital account service linked to a Mastercard. The card can be used through an application on smartphones and is accepted both in virtual and physical stores, in addition to online services most used by this audience, such as streaming and games.

Growth strategy

The Series A comes just six months after the Z1 seed round, which was led by the American Homebrew fund and raised $2.5 million. The company was also funded by Y Combinator – known for investing in Airbnb, Twitch, and Dropbox.

The round is considered strategic for the fintech‘s growth plans. In particular, for the chance of working alongside Kaszek. The fund created by the founders of Mercado Libre has already invested in famous startups in the region, such as Nubank, Kavak, Creditas, and Quinto Andar.

“We believe they are the ideal partner for this next phase of accelerated growth for Z1, given their experience in creating Mercado Libre, the largest technology company in Latin America,” explains Z1 CEO João Pedro Thompson.

“Generation Z is already the largest generation in the world today, representing around 30% of the Brazilian and world population. Whoever manages to understand and conquer this generation will reap the rewards in the coming years. We believe that the Z1 team is the most prepared in the market to do this, given the genuine purpose behind the company’s proposal and the in-depth knowledge the founders have of the customer,” says Kaszek partner Nico Berman.

After the announcement of this investment round, the startup will offer its product for free. Previously, customers were charged a monthly fee of $2. In the next 3 to 4 months, the company wants to double its size, hiring for areas such as technology, product, marketing, and customer experience.

The capital raised will be directed towards expanding fintech‘s customer base as well. The firm wants to grow ten times the number of young people attended by its digital wallet by the end of next year. The hike in the number of customers should reflect in Z1’s team expansion, which currently has 60 employees.

A digital bank for a digital generation

The executive explains that famous Brazilian fintechs such as Nubank, Creditas, Neon, and others opened the doors for consumers to experience other possibilities of financial services. With its focus set on an audience that wants access to their money and a primarily mobile experience, Z1 believes it can be the first and last bank of Generation Z.

“Our generation [millennial] is probably the last to ever walk into a banking center, who experienced what walking into a branch of a traditional bank was like. This generation we serve is the first to be fully digital, which allows Z1 to develop a new banking experience — maybe not even use the word banking,” says Thompson.

Due to regulatory aspects, accounts opened by fintech need the signature of the legal guardian for the teenagers. Currently, Z1 does not accept customers over 18 years old but already plans new services to keep customers for a long time. “We want to be the first and last bank of this generation”, comments the CEO of Z1.

Taking teens and young adults seriously

To reach this audience, the startup wants to speak directly to teenagers, avoiding talking down to their customers. “We founded Z1 because we believe in the potential of this generation, and we don’t think it should remain excluded from the digital economy since in many cases it already works or wants to have a relationship with money and seek autonomy and independence from an early age”, highlights Sophie Secaf, co-founder and head of marketing at Z1.

“With this strategic approach comes a lot of responsibility, not only to educate this population that is having their first contact with a financial service but, at the same time, to understand the behavior of this generation and their demands”, explains Secaf.

The co-founder says that the startup is looking at diversity, including age, as a way to engage in one of the main demands from this new generation.

In terms of communication, fintech encourages the financial education of account holders with the help of the social network TikTok, where it is already the digital bank with the most followers. Z1 also builds community and is close to influencers to offer tips on financial topics.

This post was last modified on November 23, 2021 4:57 pm