Former VC brings smart financial advice to people who really need it, not just the rich • australiabusinessblog.com

Will Peng graduated from Princeton with about $35,000 in debt.

He asked his immigrant parents what they thought would be the best approach for him to pay it off.

“There were companies that told me to refinance my student loans,” recalls Peng, the eldest of six children born in Taiwan. “I was also not sure how to balance paying off my student loans while building an emergency fund and putting money into my 401(k).”

So he searched on Google and “read a lot of NerdWallet articles”, but “still made a lot of mistakes”.

That’s when Peng realized he probably wasn’t alone in his struggle and that’s how the idea for his startup, Northstar, was born.

Peng realized that receiving financial advisory services is often a luxury reserved for the upper middle class or the affluent, and decided that the best way to make such services more accessible was to partner with employers to provide their employees with a financial wellness benefit. .

“We want to build financial well-being for the 100%, not just the 1%,” he said.

Specifically, Los Angeles based North Star has developed a suite of personal financial management tools to help employees through various financial and life situations with the goal of helping them understand “the full value of their compensation, equity and benefits”.

While many of its clients are in the tech space, they “vary in size and industry” and include private and public companies, according to Peng. For example Northstar’s customers include Zoom, Snap, 23andMe, Virgin Orbit and, ironically, NerdWallet. The company charges employers a monthly subscription based on to Provide employees with one-to-one access to a full-time financial advisor employed by Northstar. Employees pay nothing and there is no commission involved.

Northstar pairs employees with the same advisor so they feel comfortable and trusted, rather than having an employee talk to a different person every time they have a question. And while the company has expanded its financial advisor team, the company has set out to hire a diverse workforce so that employees are more likely to talk to people from similar backgrounds to themselves.

It appears that Northstar’s services are in more demand than ever in today’s challenging macro environment, according to pengwho was previously a general partner at Red Swan Ventures for nearly a decade and an early investor in Coinbase, Guideline, Even and Oscar.

While the CEO declined to reveal hard revenue numbers, he did tell australiabusinessblog.com that Northstar’s revenue has grown “more than 5x” year over year and is expected to grow 3x year over year next year. Since December 2020, the company has expanded its customer base by more than 600%.

“We found that financial well-being is just a broad topic, regardless of the distribution channel or how it is actually done,” said Peng. “It is necessary in good times, but especially in bad times.”

And today, Northstar announces that it has just raised $24.4 million in a new round of funding led by GGV Capital, which closed remarkably quickly in a very challenging fundraising environment, according to Peng.

“TThe time between the first meeting and the term sheet was about a month,” he told australiabusinessblog.com.

New investors PayPal Ventures, Thomson Reuters Ventures and Canvas Ventures joined existing backers M13, Workday Ventures, Parade Ventures, Foundation Capital, Designer Fund and RRE to join the round, bringing Northstar’s total to $40 million since its inception in 2016.

Although he declined to disclose the valuation, Peng noted that the new funding was a “significant upward round.”

The need for his offerings is greater than ever, because according to Peng, while consumers have access to more “great” tools than ever, they still lack the knowledge to know what to do with them.

“It has actually exacerbated the problem — this unfair expectation that individuals really know what to do with their finances,” Peng said.

“Financial advice is something that basically everyone needs. For example, it is not just those who have fair compensation,” he added. “If you get a salary, if you get benefits, you deserve financial advice.”

Image Credits: Northstar Co-Founders Matt Matteson (CTO) and Will Peng, CEO

For example, Northstar can help employees with things like understanding life insurance policies or whether or not it’s best to fit a high-deductible health plan when preparing to have children.

“It’s this really holistic approach that combines everything you receive from the employer under one roof,” Peng said.

Northstar currently has approximately 50 employees. It aims to double or triple its workforce with its new round of funding. The company also has contractors who serve as financial advisors to employees in the 18 countries — including Canada, the United Kingdom, Germany and France — where Northstar operates. The company hopes to have a presence in 30 countries by the end of 2023.

GGV Capital managing partner and Northstar board member Hans Tung tells australiabusinessblog.com that his company invested in Northstar because it “shares the vision that financial wellness should be universal for all employees.”

“Financial advice has been around for many years, but most consumers do not have access to financial advisors at affordable rates and enabled by technology, creating a huge market,” he added. “As a global investor, we’re looking for companies that are democratizing technology for underserved markets and wanting to ‘go global’.”

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