Why fintechs that help older adults are fundraising now

Several fintechs in the agetech sector are in the early stages of seeking funding.

The need for such solutions for older adults, especially when they pertain to banking safely and avoiding fraud and scams, is becoming more pressing. "[The pandemic] compounded financial exploitation because of several risk factors associated with it, including social isolation," said Jilenne Gunther, national director of AARP's BankSafe initiative. "There is never a meeting I go to with the industry where they are not talking about fintech solutions for fraud," particularly those that deploy monitoring analytics and predictive analytics. 

The most recent one to announce a fundraising round is Charlie, which provides banking services aimed at people 62+ online and via mobile app. Charlie made public its $23 million Series A on Tuesday. The company plans to use the funding to develop anti-fraud tools designed for retirees and those approaching retirement, as well as on hiring and product developments.

"Older Americans have unique financial needs that have been underserved for far too long," said Gardiner Garrard, co-founder and managing partner of TTV Capital, the lead investor, in a release. "Charlie has generated impressive customer traction just six months post-launch."

Charlie's other selling points to consumers include early access to Social Security benefits and U.S.-based customer service. It currently has several thousand users. When the neobank launched in May, it offered Social Security benefits deposits up to four weeks early, but that perk "requires a tremendous amount of capital, and given the incredible demand from customers since our launch in May, we've reached capacity at this time," the company said via email. Customers who signed up before September 1 retained that benefit, while those who became customers since can withdraw their Social Security benefit three to five days early.

Deposits are held by Sutton Bank in Attica, Ohio, which has $2 billion of assets. 

Another fintech, Carefull, which partners with financial institutions to protect their older customers from fraud, raised its own Series A in October, with $16.5 million in funding. Carefull, which provides its services to 35 financial institutions and advisor groups, will use this round to expand onboarding and support for new partners, further its research and development, and more.

EverSafe, a company that alerts users after detecting unusual banking activity and gives trusted caregivers a window into their loved ones' accounts, is about to embark on its first financing round.

"We have not been overly aggressive in seeking funding up until now, mostly because our team is lean, and we've spent the lion's share of our time cultivating and enhancing our technology and partnerships with financial services," said Howard Tischler, co-founder and CEO of EverSafe, via email. However, "We are poised for rapid growth, which makes it the right time to add venture capital to the mix."

The company will use this funding for business development, marketing and account management resources. 

"Older founders do face some challenges in raising funds, which is somewhat ironic in the age-tech industry," said Tischler.

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According to investors, the need to safely monitor older adults' financial activities becomes more critical as they strategize their wealth transfers.

Alloy Labs has invested in both Carefull and The Postage, a digital estate-planning platform. "We believe generational transitions, particularly from older generations to the next, are a place where community banks can play a critical role supporting the safety and wellness of their customers," said Alloy Labs CEO Jason Henrichs via email. "Banks hold their customers' trust, especially the older ones, and part of that compact is to bring them additional services to keep them safe."

Adam Aspes, a managing partner at JAM Fintop, a joint venture that runs a venture capital fund with banks as limited partners, is familiar with Carefull. "Recent bank failures have accelerated a secular trend towards banks focusing on increasing non-interest income," he said via email. "To do so, we see a huge opportunity for banks to lean in on wealthtech, as the greatest transition of wealth is about to occur from Baby Boomers to a digital-first generation. This will require next generation technology and agetech tools like Carefull help bridge that transition."

Still, the road ahead for age-related fintech funding may be slow going. 

PitchBook fintech analyst Rudy Yang isn't tracking agetech funding within the fintech vertical, but he expects banking solutions for older adults to occupy a small fraction of total fintech funding right now. He notes via email that consumer-facing neobanks have secured a collective $456 million of venture capital funding for the first three quarters of this year, representing 1.6% of total fintech VC for the same period. 

"While we are optimistic about financial solutions for the older adult market, we believe many investors will exercise caution on neobanks that cater to a niche demographic, given the unsuccessful outcomes of prior 'neobank for x' startups," he said. 

These fintech developments complement low-tech efforts to protect older adults from financial exploitation. For instance, a number of bank and credit union staff have undergone training to recognize signs of dementia and handle "tough and delicate" conversations to help their clientele recognize potential abuse.