EarlyBird, an app that lets families and friends gift investments to children, has raised $4.5 million in a seed extension round that was partially funded by its user base. The app lets parents create a custodial account, also known as a UGMA (Uniform Gifts to Minors Act) account, which allows them to invest in stocks, bonds, mutual funds and other securities on behalf of their child. Once the child turns 18, the investments become theirs. In addition to saving for college, the funds can be used for things like a down payment on a home, seeding your child’s first business, traveling the world, retirement and more.
The startup’s founder and CEO Jordan Wexler told TechCrunch in an interview that because EarlyBird is a community-based investing platform, the company believed it had an interesting opportunity to test its community outside of the traditional crowdfunding platforms and see if they would want to invest in the round.
“As this round started to come together, we recognized that there could be a cool way for us to open up a specific allocation for the actual parents that are investing in EarlyBird, so that the parents that are investing in EarlyBird actually invest in the platform that’s investing in their kids,” Wexler said. “We sent out a feeler email to our user base and it was by far the most engagement we’ve ever seen on a survey like that.”
The startup then opened up the allocation, which was filled within the first 48 hours. Wexler says that being creative paid off, noting that if you want to survive in today’s startup market, you have to continue to get creative and tap into the community around you.
The funding round was preempted by IDEO Ventures and included investments from all of EarlyBird’s previous seed round investors, including 776 Ventures, Fiat Ventures and RareBreed Ventures. The round also included investments from ResilienceVC, Sweater Ventures, Alumni Ventures, Goodwater Capital, Wintrust Bank, Lightspeed Scout Program and Parallel.
The latest funding round brings the company’s total amount of funding raised to $10.9 million. EarlyBird closed a $4 million seed funding round in November 2021 and a $2.4 million pre-seed round in November 2020.
EarlyBird plans to use the funding to expand on the startup’s focus on community-based investing, as the platform is not just all about investing. Wexler says the startup has found that investing in a child is deeply emotional, which is why it has social features. For instance, every time you invest, you can create a video memory that contextualizes the investment.
“What we ended up seeing over the last couple of years is that parents started to use this as a way to catalog all these special moments with their child,” Wexler said. “For instance, if a mom got a promotion and wanted to celebrate, she could do a one-time investment and make a video memory talking to her child about it. And so EarlyBird becomes this really unique centralized place where you are building this time capsule.”
EarlyBird will also use the funding to focus on the next interaction of its investment services. The startup currently offers the ability for a parent to select one of five Managed Portfolios and invest. In the future, EarlyBird wants to be able to create multiple customized portfolios so that a parent can pick and choose stocks and do so with their child as they grow up. In addition, the startup is starting to explore ways to bring a college savings 529 plan into the EarlyBird experience.
The startup is currently focused on the 0 to 7-year-old demographic, but EarlyBird plans to provide services for the entire lifecycle journey from 0 to 18+.
“We want to build a dedicated experience for a teen to be able to take ownership so that at 18 we become their primary brokerage account, and we take over the likes of any other larger financial institutions because we’ve been their trusted financial solution from day one,” Wexler said. “And so you continue to invest with us, and then of course, your children, and then the whole cycle starts again.”