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TreeCard, a climate-conscious digital money app, raised $23 million from investors in a new financing round.
Founded by British entrepreneur Jamie Cox in October 2020, TreeCard is a novel concept in the fintech world. It offers users a spending and money management platform tied to a debit card made from wood.
The firm uses 80% of the profits it makes from card interchange fees to plant trees through a partnership with green search engine Ecosia. TreeCard has so far planted more than 200,000 trees.
The deal underscores increased interest by VC investors in companies addressing climate change. Funding for climate tech startups hit a record $111 billion in 2021, according to a report from U.K. startup network Tech Nation.
“There’s hundreds of millions of people in the world who are changing their behavior based on the environment,” Cox told CNBC in an interview. “There isn’t a super app for the environment yet.”
Super apps act as all-in-one platforms that serve a range of user needs spanning instant messaging, banking and travel. Cox envisages TreeCard becoming a super app focused on climate — his app includes a game that lets users visualize how many trees their activity has helped produce, for example.
Peter Thiel’s Valar Ventures was the largest investor in TreeCard’s round, while EQT, Seedcamp and climate-centric venture capital firm World Fund also chipped in. Valar is a prolific investor in fintech, having previously taken stakes in the likes of Wise and N26.
The platform, which is still operating in beta testing mode, plans to use the funding for an official launch later in 2023. In addition, TreeCard will use the cash to grow its roughly 30-person team, with the aim of nearly doubling in size.
TreeCard is currently only available in the U.S., with a waitlist of more than 250,000 clients. It is now gradually onboarding users. TreeCard plans to launch in the U.K. and Europe, too, “hopefully soon,” Cox said.
Though based in the U.K., TreeCard chose the U.S. as its launch market. The U.S. has been a tough place for rival European fintechs. Monzo pulled its application to acquire a U.S. banking license, while N26 shuttered its American operations completely.
TreeCard isn’t a bank itself but offers its accounts through Sutton Bank, a regulated lender.
Higher rates on the fees merchants must pay every time a customer uses their card to spend make the U.S. a more lucrative opportunity than Europe, TreeCard’s CEO said.
But according to Cox, what European fintechs often get wrong in the U.S. is not realizing “the kind of requirements on a finance product are very different to Europe.”
“When finance-type companies come from Europe, they don’t understand intimately the American audience,” he told CNBC.
“Rewards are almost always front and center for especially spending products but a lot of finance products. It’s more of an afterthought in Europe.”
TreeCard offers clients up to 3% of annualized interest on their deposits, a feature it offers through third-party vendors.
“The commitment there is that your funds aren’t used for fossil fuel investments,” Cox said.
Banks have channeled massive sums of money to support fossil fuel companies down the years. Analysis from campaign groups Urgewald, Reclaim Finance and more than two dozen other NGOs found that commercial banks channeled $1.5 trillion to the coal industry between January 2019 and November last year.
TreeCard’s funding also defies some of the troubles being faced in the fintech sector, where firms are putting listing plans on ice and cutting back on expenses to brace for a likely recession. Klarna, the buy now, pay later firm, saw its valuation plunge 85% in July, and laid off 10% of its workforce.
“We will be hiring but we have to be careful,” Cox said. “The environment is different from last year.”
He added: “The key thing is that businesses over the next year and a half probably, consumer businesses are going to have to find ways to grow that aren’t just conventional, ‘plow loads of money into Facebook ads and get users.’ That’s not going to be the sustainable model of growth.”
While at university, Cox founded a company called Cashew, which he described as “Venmo for the U.K.” He later joined Peter Thiel’s Thiel Fellowship, a two-year entrepreneurship program, where he started cloud computing startup FluidStack.