Former VC gives smart financial advice to people who really need it, rather than just the rich

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

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

“I had companies telling me that I should refinance my student loans,” recalls Peng, who is the second oldest of six children born in Taiwan. “I also wasn’t sure how to balance my student loan payments 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 this point that Peng realized that he was probably not 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 wealthy, Peng decided the best way to make such services more accessible was to partner with employers to offer a financial wellness benefit to your employees.

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

Specifically, based in Los Angeles North Star has developed a suite 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, equity, and benefits.”

While many of their clients are in the technology space, They “vary in size and industry” and include public and private companies, according to Peng. For example, Northstar clients include the likes of Zoom, Snap, 23andMe, virgin orbit and, ironically, NerdWallet. The company charges employers a monthly subscription based on the number of employees tor give employees personalized access to a full-time Northstar-employed financial advisor. Employees pay nothing and there is no commission involved.

Northstar pairs employees with the same advisor so they feel comfortable and familiar rather than an employee talking to a different person every time they have a question. And as the company has built its team of financial advisers, it has been intent on hiring diverse staff so that employees are more likely to talk to people with similar backgrounds to their own.

It appears that Northstar’s services are in more demand than ever in the current challenging macro 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 the expectation is that it will grow 3x year over year next year. Since December 2020, the company has increased its customer base by more than 600%.

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

And today, Northstar announces that it has just raised $24.4 million in a new funding round led by GGV Capital, which Peng says took a long 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 to participate in the round, bringing Northstar’s total raised to $40. million since its creation in 2016.

While he declined to disclose the valuation, Peng said the new financing was a “significant round.”

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

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

“Financial advice is something that fundamentally everyone needs. It’s not just those who have equity compensation, for example, ”she added. “If you get a paycheck, if you get benefits, then you deserve financial advice.”

Image credits: Northstar co-founders Matt Matteson (CTO) and Will Peng, CEO

Northstar, for example, can help employees with things like understanding life insurance or whether a high-deductible health plan is the best option if you’re 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 about 50 employees. It is looking to double or triple its headcount with its new funding round. The company also has contractors who act as financial advisors to employees in the 18 countries, including Canada, the United Kingdom, Germany and France, in which Northstar operates. The company expects to be in 30 countries by the end of 2023.

Managing Partner of GGV Capital and Northstar Board Member Hans Tung tells TechCrunch that his company invested in Northstar because it shares “the vision that financial well-being should be universal for all employees.”

“Financial advice has been around for many years, but most consumers don’t have 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 that want to ‘go global’.”

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