Kleiner Perkins craves access to the financial data of highly educated consumers entering the workforce.
Last Thursday, Pillar announced a $5.5M seed round led by Kleiner Perkins. The NYC-based startup aims to help students better manage their loans by connecting them with offering them tailored recommendations based on their personal financial conditions and offering to connect them with loan providers. CEO Michael Bloch says Pillar is planning to use the newly raised funds to hire more engineers to join its 10-person team in New York City.
What were the VCs thinking?
Kleiner Perkins focuses on companies that resolves essential problems for the future. In this deal, they are gaining exposure to an app that seeks to help 45 million American pay-off their student loans.
This round reminds us of Kleiner Perkins’ recent investment in Future, an app that offers a platform that connects people with personal trainers remotely and only charges $5 a day. Both ventures are addressing large lifestyle stressors (student loan repayments and fitness) that a large number of Americans often face without simple answers.
The Traction Behind the Deal
Pillar targets recent college graduates, a demographic group who are relatively inexperienced in finance. Pillar’s CEO Michael Bloch and his wife find their own experiences highly relatable to those of the youth nowadays. “We struggled to figure out the right way to pay them back,” he explains. “We read blog posts and articles. We made spreadsheets. We even talked to a financial advisor. But there really was no easy way for us to figure out what was the right thing for us to do. And I realized there are 45 million people with loans, and millions of those people have had the exact same experience as I did.”
Pillar claims that it will not sell its data, but rather provide it for free to research institutions and non-profits dedicated to promoting policies related to student loans.
Although 45 million Americans with student loans is a large target market, Pillar’s freemium or low monthly fee offering isn’t a model that would get it to the $100M+ revenue opportunity needed to support a venture-scale outcome.
Therefore, it is highly likely Pillar will use its data to either up-sell or cross-selling other financial products to its customers, or perhaps its valuable data will ultimately be sold through an acquisition to a larger company seeking access to its valuable demographic of highly-educated consumers entering the workforce.
This article originally appeared on Foundational.
Kevin He is a dedicated economics and mathematics double major at Williams College passionate about investing, venture capital, and startups. He has interned in finance, operations, and strategy at PillPack (acquired by Amazon), and has worked as a market analyst for a boutique management consulting firm BusinessHub Consultants in Santiago, Chile.
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