Recently we did a deep dive into Web3 and identified tools and experiences to make Web3 and Crypto approachable for consumers as a key area of interest to Madrona. And today, we are excited to announce our investment in Stack, which is educating a young, crypto-curious generation (and their parents) about the ins and outs of the crypto market.
Under-18 fiat and banking products have seen incredible growth driven by social media over the past few years. Teen investors have entered the stock market in droves as the pandemic created a unique climate for retail investors. The rise of social media investing content has made Gen Z interested in learning about finances at a much younger age, experimenting and learning how to take responsibility for and control of their finances in the process. Surveys indicate that 71% of Gen Zers prefer financial information from people that look like themselves, which has resulted in them turning to the rising number of “finfluencers” — finance influencers — on TikTok. The hashtags #FinTok and #Investing have more than 500 million and 3.7 billion views, respectively. With increased interest in investing, under-18 fiat products have recently resulted in eight unicorns, including Gen Z banking products Step, Acorns, and Webull. Last year, Fidelity also launched youth trading accounts.
Gen Z is considered an entrepreneurial generation. As a result, many of them are crypto-curious. Coinbase and FTX have served as consumer entry points to crypto through crypto trading and educational content. However, they are inaccessible to the minors — the next generation of consumers — curious about cryptocurrencies, Web3, and modern technologies.
Enter Stack. Stack is positioned to create a new category by being the first education-focused crypto application for teens. We met the Stack team when they participated, and won, Madrona Venture Lab’s (MVL) Web3 event, Launchable, earlier this year. Since then, Stack Founder and CEO Will Rush has blown us away with his passion for building a product that safely educates the next generation about finance and crypto through doing vs. reading or watching.
With his founding team, Natalie Young and Angela Mascarenas, Will is prioritizing safety and education in the Stack app. The team has gone through the heavy lifting to get the first Uniform Transfers to Minors Act (UTMA) license for crypto trading accounts. These UTMA accounts are familiar to some families who have used them in the past to educate their minor children on saving and stock and mutual fund trading. The account is owned and controlled by the parent until the minor turns 18, but the teen also has access and the ability to initiate trades (that are required to be approved by the parent.) Parents can set up trading and investing limits for their children, and Stack requires all transactions go through its platform rather than allowing users to move assets off-chain, thereby eliminating the main valve for fraud.
The team at Stack has built this in partnership with their customers. They created a high-school ambassador program to engage early users and design a fun, educational product complementary to teens’ current finance, technology, and Web3 interests. The team has numerous high-school-based investment clubs around the country interested in getting into the initial rollout. We find Stack’s 5,000-person wait list for the iOS or Android app impressive.
Stack’s business model is thoughtfully designed around education instead of trading incentives. Unlike over-18 crypto exchanges, Stack is monetizing with a subscription, not on a per-trade basis. Users also get bite-sized content served up daily in the app and receive crypto as an incentive to watch.
Over the past couple of months, Will has been working with both MVL and Madrona on the initial product, team, and launch strategies. We have been so impressed with their traction and passion and are excited to invest and help them grow. Additionally, we believe the Seattle Web3 ecosystem is on an upward trajectory and will be of increasing interest to Madrona. Stack launched their Android app a few weeks ago, which people can download from the app store. The iOS app is around the corner, and we are excited for it to be available for consumers.