Gamified Savings Account Yotta Savings Raises $3.3 Million
Can a savings accounts that come with a chance to win a lottery jackpot change the way American consumers save? That’s what Yotta Savings is betting on — and now so are several venture capital firms. As Crunchbase reports, Yotta has just closed a $3.3 million seed round. In addition to some angel investors, the round included participation from Slow Ventures, FundersClub, TwentyTwo VC, Chapter One, CapitalX, and Y Combinator. Notably, Yotta previously graduated from Y Combinator’s accelerator program.
Yotta Savings is a prize-linked digital banking account that allows users to win a weekly lottery prize of up to $10 million. For every $25 a user has in their savings balance, they’ll earn one ticket to that week’s contest. With six regular numbers and one “Yotta Ball” making up each ticket, the app reveals another number selection each night at 9 p.m. Eastern. Currently, Yotta partners with Evolve Bank & Trust to hold deposits (making them FDIC-insured) as well as with a third party insurance carrier that’s responsible for pulling the lottery numbers.
According to Yotta co-founder Adam Moelis, he took inspiration for the idea of the gamified account from the United Kingdom. In that country, nearly one-third of bank accounts have a prize element. With that in mind, Moelis figured that the model could be a hit stateside as well.
Speaking to Crunchbase, he also clarified the concept, explaining, “At first, when you talk to people about this, they think it sounds like a gambling concept, but you can’t lose money. It’s offered more like a sweepstakes, which is totally legal. When you save money in your bank account, it is linked to the sweepstakes and you have a chance to win prizes.” In fact, Moelis contrasts the traditional lottery and Yotta by saying, “The lottery is literally the worst gamble you can make. I thought this would be a way to solve the problem of saving while also scratching the lottery itch without the likelihood of a loss. In short, to bring more instant gratification to long-term behavior.”
With the added funds, Yotta Savings first intends to invest in improving their engineering and customer support. This comes as the app has already experienced impressive growth, boasting more than 21,000 accounts and seeing over $40 million in deposits since officially debuting in July. Additionally, Moelis tells CrunchBase that he’d like to expand Yotta’s core banking offerings to include checking functions and even credit cards.
After only a few months of operation, Yotta Savings seems to be enjoying a promising start. With the extra funds, they now appear poised to capitalize on that momentum. Also potentially helping their case to consumers is that their arrival comes at a time when interest rates for other digital bank accounts are a far cry from what they once were, giving APY-seekers extra incentive to try out this alternative. While it’s too early to say whether or not Yotta Savings will be a success in the end, there’s certainly potential for this gamified account to really hit the jackpot.