Firstcard Secures $4.7 Million in Seed Funding to Help College Students Build Credit

Introduction:

Firstcard, a fintech startup founded in 2020, aims to address the challenge faced by college students in the U.S. who struggle to access financial products and build credit due to inadequate credit history. This issue isn’t limited to international students; even local students find it difficult to obtain credit cards. Firstcard’s mission is to provide a range of financial products tailored to the needs of college students, enabling them to establish better credit profiles and achieve financial success. Recently, the company announced that it has raised $4.7 million in seed funding, bringing its total funding to $7.7 million.

The College Credit Challenge:

Kenji Niwa, the CEO of Firstcard and an immigrant entrepreneur, experienced firsthand the difficulties of accessing financial products in the U.S. when he moved to pursue an MBA at UC Berkeley in 2017. Recognizing that this problem extended beyond international students, Niwa, along with CTO Daniel Junqueira, founded Firstcard to empower both domestic and international college students.

According to Niwa, approximately 50% of college students refrain from obtaining credit cards due to fear of overspending and rejection during the application process. Furthermore, 29% of Gen Z consumers have either no credit score or are unsure of their credit status, as revealed by a recent FICO study.

Firstcard’s Solutions

Firstcard’s initial offering, the Credit Builder Card, was launched recently. This credit card is designed with the unique needs of college students in mind. It features no annual fees, no minimum deposit requirements, and does not demand a credit history for approval. Users of the Credit Builder Card can benefit from an annual percentage yield (APY) of 1.25% with Firstcard and up to 4.25% APY with Firstcard Plus.

In addition to the credit card, Firstcard provides students with a bank account that offers cashback rewards at over 29,000 select hyperlocal merchants, with potential rewards of up to 15%.

Firstcard’s future plans include the creation of communities for college students and the introduction of financial aid and student loans. Niwa emphasizes that addressing the credit issue is just the beginning of a larger initiative aimed at providing financial tools and education to students. Notably, only 22 states mandate financial literacy courses for students, leaving many ill-prepared to manage their finances upon graduation.

Competitive Advantage:

Firstcard believes it has a competitive edge over neobanks and other fintech players in the industry. While some competitors offer credit-related benefits such as cashback or APY, Firstcard asserts that its offerings are more attractive to students, providing higher returns and benefits.

Monetization Strategy:

Firstcard plans to generate revenue through three primary channels: interchange fees, a $3 monthly subscription fee for Firstcard Plus users, and interest revenue from unsecured credit cards (which are yet to be launched).

Founder’s Background:

Kenji Niwa is not new to entrepreneurship. Before relocating to the U.S., he successfully sold his previous company, i Tank Japan, a human resource platform that provided internship and job information for college students in 2015.

Future Plans:

The funds raised in this round will be allocated to product development and marketing efforts as Firstcard continues to expand its offerings and reach more college students.

Investors:

The seed funding round included participation from angel investors and venture capital firms, including AngelList Early Stage Quant Fund, CyberAgent Capital, East Venture, and Japanese soccer player Keisuke Honda, who also participated in previous funding rounds.

In conclusion, Firstcard’s mission to empower college students with financial products and education to build better credit is gaining momentum with this recent seed funding. As the company continues to develop its offerings and expand its reach, it aims to make a positive impact on the financial future of students across the U.S. and beyond.