Former VC brings smart financial advice to those who really need it, instead of just the rich

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Will Peng has taken out a loan of about $35,000 from Princeton.

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

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“Many companies were telling me that I should refinance my student loans,” recalls Peng, the eldest of six children born in Taiwan. “I wasn’t even sure how I should pay off my student loans while building an emergency fund and putting money in my 401(k).”

So he did a Google search and “read a lot of NerdWallet articles” but still “made a ton of mistakes.”

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It was at that point that Peng realized that he was not alone in his struggles and so the idea for his startup, Northstar, was born.

Realizing that obtaining financial advisory services is often a luxury reserved for the upper middle class or affluent, Peng decided that the best way to make such services more accessible was to partner with employers to help their employees. to provide financial welfare benefits.

“We want to make financial wellness 100%, not just 1%,” he said.

Specifically, Los Angeles-based Northstar has created a slew of personal financial management tools to help guide employees through a variety of financial and life situations with the aim of helping them understand “the full value of their compensation, equity and benefits.” set has been developed.

While many of its clients are in the tech space, they “range 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 a monthly subscription fee based on the number of employees to provide employees with face-to-face access to a full-time financial advisor employed by Northstar. Employees pay nothing and there is no commission involved.

Northstar connects employees with a single mentor so they feel comfortable and familiar instead of having to talk to an employee in person every time. And as the company builds out its financial advisory team, the company is looking at deliberately hiring diverse employees so that employees are more likely to talk with people from similar backgrounds.

It appears that Northstar’s services are more in 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 Were.

While the CEO declined to reveal hard revenue figures, he told TechCrunch that Northstar’s revenue grew “more than 5x” year-over-year and expects it to grow 3x year-over-year next year. Since December 2020, the company has increased its customer base by over 600%.

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

And today, Northstar is announcing that it has raised $24.4 million in a new funding round led by GGV Capital, which, according to Peng, has a remarkably quick time to close in a very challenging fundraising environment. Put.

“The 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 to participate in the round, along with existing backers M13, Workday Ventures, Parade Ventures, Foundation Capital, Designer Fund and RRE, raising Northstar’s total since its 2016 inception. increased to $40 million.

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

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

“It really exacerbates the problem — it’s an unreasonable expectation that individuals know exactly what to do with their finances,” Peng said.

“Financial advice is something that basically everyone needs. For example, it’s not just for those who have equity compensation,” he said. “If you get a salary, if you get a benefit , then you are eligible for financial advice.”

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

For example, Northstar can help employees understand life insurance or whether a high deductible health plan is best suited if you’re preparing to have children.

“It’s a really holistic approach that combines everything you can get from an employer under one roof,” Peng said.

Currently, Northstar has about 50 employees. It is looking to double or even triple its workforce with its new round of financing. The company also has contractors who act as financial advisors to employees in the 18 countries – such as Canada, the United Kingdom, Germany and France – in which Northstar operates. The company is expected to be in 30 countries by the end of 2023.

Hans Tung, managing partner at GGV Capital and a member of Northstar’s board, told TechCrunch that his firm has invested in Northstar because it “must financial well-being be universal for all employees.”

“Financial advice has been around for many years, yet most consumers do not have access to financial advisors at affordable rates and enabled by technology, creating a huge market,” he said. “As a global investor, we look for companies that democratize technology for underserved markets and want to ‘go global’.”

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