On EQT Ventures’ investment in Cleo, radically transforming the next generation’s relationship with money

Today, Cleo — the financial assistant designed for Gen-Z — announces it has raised $44 million Series B funding led by EQT Ventures to continue fighting for the world’s financial health. Now trusted by 4 million Gen Z and Millennial users, 96 percent of which are US based, Cleo has reached increasingly strong unit economics and over 400 percent revenue growth in the last year. Existing investors Balderton Capital and LocalGlobe also participated, alongside angel investors Taavet Hinrikus, Matt Robinson, Errol Damelin, Niklas Zennstrom, Alex Chesterman and Ian Hogarth.

Let’s start with an obvious caveat: writing an investment thesis this year definitely feels different given, you know, everything else. In talking about VC investments, however, we can shed light on the seeds of the future being planted today and how, we hope, they’ll address some of the challenges being exposed across our society.

The most obvious of which, already clear well-before the pandemic and protests of 2020, is that our system isn’t working out for everyone. To put it bluntly, as many others have done elsewhere: capitalism, as we know it, is broken.

You can see the warning signs of this everywhere around you, but let’s go over some basic facts to highlight the issue here:

• Income Inequality — Whilst US GDP has risen 79 percent since 1980, the vast majority of the new wealth created has gone towards a tiny fraction of the population at the top (the 0.01%)
• Economic Immobility — “In 1970, a 30-year-old had a 92 percent chance of earning more than her parents did at the same age. But today, she has just a 50 percent chance of out earning her parents”
• Record Debt Levels — “The cost of higher education grew by 7 percent per year through the 1980s, 1990s, and much of the 2000s, far faster than the overall rate of inflation, leaving Millennial borrowers with an average of $33,000 in debt”

Enter Covid-19

And if that wasn’t bad enough, the worst economic outlook since The Great Depression brought by Covid-19 has only compounded this crisis, to say nothing of its disproportionate effect on minorities. As the evidence is now showing, “under-25s have been hardest hit by the Covid-19 economic fallout.” Or to put it rather directly, following a recent New York Times subhead, “those entering the job market in a downturn may never catch up in pay, opportunities or confidence.”

As a result, young people’s relationship with money has never been more fragile. With millions living paycheck-to-paycheck — constantly worrying about their finances and whether they can pay their bills each month — economic uncertainty has become the default state for this generation.

Meet Cleo

Designed to solve this pain point, Cleo is a tool that helps you take control of your finances. As an intelligent assistant for your money, the app functions as an interface that connects to all your bank accounts, giving you a holistic overview of your finances. Instead of the traditional (dry) banking UI, Cleo uses conversational AI to provide you with insights and proactive recommendations on spending, budgeting and saving, ultimately changing how you interface with your money.

In other words, Cleo is radically transforming the next generation’s relationship with money. In just a few years, the app’s empowered more than four million users to take control of their financial lives. Cleo’s superpower is her tone of voice and sense of humour, which allows the app to build relationships with users at scale, learning their preferences and helping them make the right decisions with their money.

With the unique ability to learn about each user from close personal conversations in ways that other financial services simply aren’t equipped to do, Cleo occupies a unique position in people’s relationships with money. Thanks to this, Cleo can learn about what motivates each user and can tailor its suggestions accordingly.

This is a very strong position to be in a future where people will have many different financial services. Cleo will work as the layer on top of it all, helping users’ financial wellbeing across all available services.

In a time like this, Cleo has become more relevant than ever. The team is leaning in to support their users, and has already launched several initiatives in response to COVID-19, amongst them:

• Random Acts of Relief — an initiative that connects members of the community who can give with those who can’t. People were able to gift immediate financial support to one another, along with a few words of encouragement
• A Survival Kit — customers can type “survival kit” to Cleo at any time and get advice on weekly spending, track bills, cancel subscriptions, tips on negotiating rent, and more to help them through the crisis.

With this new round of funding, Cleo will be able to double down on its mission: fighting for the world’s financial health and accelerate US expansion. We’ve been closely tracking Cleo since launch and have been extremely impressed with the team’s disruptive approach and speed of execution. As they enter this new phase, we couldn’t be more excited and honoured to partner with Cleo on the next stage of the company’s journey!