San Francisco-based startup Digit, opened recently, has raised $11.3 million in new funding led by General Catalyst along with the existing investors Baseline Ventures and Google Ventures and former Visa President Hans Morris.
Startup Digit is a simple platform that helps customers save their money, by simply linking to their bank accounts and gradually channelizing money into a saving account that does not bears any interest. As the accounts are linked, it gets easy for Digit to apply algorithm and track their spending patterns and determines the amount of money that has to funneled into a FDIC – insured saving account in an automated way. In regular interval, users would receive updates about their finances as text message in case they want to change their accounts settings.
The company intends to set some money aside that users would have done it on their own. The company has partnered with banks like Wells Fargo and Bofl Federal Bank where the money is saved. General Catalyst managing director Hemant Taneja states, “No one like to save – it’s is a painful process.. But everyone likes savings.” That the simple mechanism behind the functioning of the company.
Since its inception just three months ago, Digit has already saved more than $1 million for its users money and has increased its user base by 50 times. When asked to Ethan Bloch, co-founder and CEO, he denied to share user numbers as they are not big enough to share he feels. But the company has seen tremendous growth since its launch with regard to its user base and savings. Block also states that the more and more users start using the service through the word of mouth and referrals (where users earn $5 if referred a friend), though it has attracted some media, press and some well-known finance related bloggers.
The biggest advantage of the company is that its customers do not touch the money the system has set aside for them. There are customers who even set aside more money than the amount prompted for them through the Digit’s SMS. However one-fourth of the users do use the money set aside by the system. But it is a very small portion when compared on the whole. This shows the promise of the system.
However, it is quite disappointing to know Digit does not have a mobile app to view the balance and manage the fund. But its website is just to browse whereas most of the communications happen through text messages. Users send texts to view their balance, change the savings etc., The company would continue to work on the same as the whole communication interface is simplified and easy to use for all. however, the service is also looking at Facebook, Whatsapp to communicate with customer about their needs and grievances.
Digit is working on to expand more options and features for its users and serve them better with the new funding. Constant requests from the users to pay an interest to the savings account, has pushed the company to think about it too. Currently, the company makes its revenue out of it. But in future the company would share it with its users said Bloch. It is also looking at the ability to add overdraft protection to its offering. End of the day, Digit wants to organize and automate its users financial wants whether it is managing savings, paying recurring bills, lowering debt or plan retirement.
Until now Digit has raised $13.8 million and it has already started making aggressive plans to make a complete picture of its user’s financial statements and hoping to become integral of every man’s financial life.