FloatMe Announces $16.2 Million Funding Round
For years, overdraft fees have been the bain of many consumers’ banking lives. While a mistake or late payday might lead their account to fall just below $0, their debt would be exacerbated by a fee of $35 or more — with additional fees hitting as more negative transactions arose. Now, a FinTech whose aim is to prevent those fees is earning funds from investors.
This week, FloatMe announced that it had raised $16.2 million. The Series A was led by Foundry Group while ManchesterStory, Active Capital, Samsung Ventures also participated, alongside Michal Cieplinski from Pipe, Jordan Wright from Atomic, and John Henry from Loop. With the funds, the startup says it’s looking to fuel its continued growth.
FloatMe is a service that allows users to access up to a $50 cash advance without any credit checks or interest charges. Instead, the platform uses Plaid to connect to the customer’s bank account where they receive direct deposits. Additionally, the FloatMe app includes spending tracking and other tools to help users better manage their money. Currently, FloatMe offers a one-month free trial followed by a $1.99 monthly fee, According to the company, they’ve helped save customers more than $80 million in overdraft fees since launching in March 2020.
Offering a look at the company’s goals, FloatMe’s co-founder and CEO Josh Sanchez said in a statement, “We set out to help people who were drowning in debt. Delivering a brand, experiences and products that, without compromise, prioritizes our members best financial interests allows us to continually demonstrate our commitment to solving that problem.”
Speaking to what his firm saw in FloatMe’s potential, Foundry Group managing director Seth Levine stated, “The commitment and focus that FloatMe has towards solving a very real problem for millions of Americans and serving their members in ways that support their immediate and longer term needs really resonated. Coupled with their impressive growth since launch and their thoughtful and differentiated product roadmap, we couldn’t be more thrilled to have them in our portfolio.”
Incidentally, FloatMe is one of several startups offering solutions to help consumers access money they’ve earned. For example, companies like Daily Pay have taken a different approach, working with employers to offer pay-on-demand services. Meanwhile, FinTechs such as Varo, One Finance, and others now have various payday loan alternatives built into their banking platforms. At the same time, big banks have also been bending a knee to regulators by introducing programs they say will help reduce overdraft fees. Despite those overtures, there will likely still be a need for these FinTech offerings — which is why it’s not surprising to see FloatMe attracting investors. With the Series A funds in hand, the startup is now definitely one to watch going forward.