Will Peng graduated from Princeton with about $35,000 in debt.
He asked his immigrant parents what they thought would be the best approach to pay it back.
“There were companies telling me I had to refinance my student loans,” recalls Peng, who is the eldest of six children born in Taiwan. “I also wasn’t sure how I was supposed to balance paying off my student loans while building an emergency fund and putting money into my 401(k).”
So he googled and “read a lot of NerdWallet articles,” but still “made a lot of mistakes.”
It was at that point that Peng realized that he probably wasn’t alone in his struggles, and thus the idea for his startup, Northstar, was born.
Realizing that receiving financial counseling services is often a luxury reserved for the upper middle class or the affluent, Peng decided the best way to make these services more accessible was to work with employers to offer a financial wellness benefit to their employees.
“We want to build financial wellness for the 100 percent, not just the 1 percent,” he said.
Specifically, based in Los Angeles North Star has developed a set of personal financial management tools to help guide employees through various financial and life situations with the goal of helping them understand “the full value of their compensation, justice and benefits.”
While many of its clients are in the technology space, “they range in size and industry” and include private and public companies, according to Peng. For example, Northstar’s Customers include the likes of Zoom, Snap, 23andMe, Virgin Orbit and, ironically, NerdWallet. The company charges employers monthly subscription based on the number of employees to give employees one-on-one access to a full-time financial advisor employed by Northstar. Employees pay nothing and there is no commission.
Northstar pairs employees with the same advisor so they can feel comfort and familiarity instead of having an employee speak to a different person every time they have a question. And as the company builds its financial advisory team, the company plans to hire a diverse staff so employees are more likely to talk to people with similar backgrounds to their own.
It appears that Northstar’s services are in greater demand than ever in the current challenging macroeconomic environment, according to Peng, who 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 disclose hard revenue figures, he told TechCrunch that Northstar’s revenue has grown “more than 5x” year-over-year, and that the expectation is that it will grow 3x year-over-year next year. . As of December 2020, the company has grown its customer base by more than 600%.
“We found that economic well-being is just a broad topic, regardless of the distribution channel or how it’s actually done,” Peng said. “It is needed in good times, but especially in bad times.”
And today, Northstar is announcing that it just raised $24.4 million in a new funding round led by GGV Capital that, according to Peng, took an extremely quick time to close in a very challenging fundraising environment.
“Tthe time from the first meeting to the term sheet was about a month,” he told TechCrunch.
New investors PayPal Ventures, Thomson Reuters Ventures and Canvas Ventures joined existing backers M13, Workday Ventures, Parade Ventures, Foundation Capital, Designer Fund and RRE, which brings Northstar’s total since its 2016 launch to $40 million .
While he declined to disclose the valuation, Peng noted that the new funding was a “significant upward cycle.”
The need for his offering is greater than ever because, in Peng’s view, while consumers have access to more “cool” tools than ever before, they still lack the knowledge to know what to do with them.
“It’s actually exacerbated the problem — this unfair expectation that people really know what to do with their finances,” Peng said.
“Financial advice is something that virtually everyone needs. It’s not just those who have equity compensation, for example,” he added. “If you’re getting a salary, if you’re getting benefits, then you deserve financial advice.”
Northstar, for example, can help employees with things like understanding life insurance or whether or not a high-deductible health plan is best if you’re getting ready to have children.
“It’s this really holistic approach that combines everything you get from the employer under one roof,” Peng said.
Northstar currently has approximately 50 employees. It is looking to double or triple its headcount with its new round of funding. The company also has contractors who serve as financial advisors to employees in the 18 countries — such as Canada, the United Kingdom, Germany and France — in which Northstar operates. The company hopes to be in 30 countries by the end of 2023.
Managing Director of GGV Capital and Board Member of Northstar Hans Tung tells TechCrunch that his company invested in Northstar because it shares “the vision that economic prosperity should be universal for all workers.”
“Financial advice has been around for many years, yet most consumers lack access to affordable, technology-enabled financial advisors, creating a huge market,” he added. “As a global investor, we look for companies that democratize technology for underserved markets and want to ‘go global’.”
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