EarlyBird, a mobile app that promotes investing for kids, announced a $4 million seed round on Monday, led by Reddit co-founder Alexis Ohanian’s Seven Seven Six. Other strategic partnerships in the round included Gemini‘s Frontier Fund along with Rarebreed Ventures, Fiat Ventures, Network Ventures, NBA Player Thaddeus Young’s Reform Ventures, and Alex Lieberman, executive chairman and co-founder of Morning Brew, among others.
Founded in 2019, Earlybird’s platform gives kids investment opportunities with parental oversight by opening a custodial investment account. The company offers parents a fixed portfolio model where it recommends ETF-based portfolios made up of both securities and bonds based on a child’s age, investment goals, risk tolerance, etc.
Technically, EarlyBird operates as a Registered Investment Advisor (RIA) and partners with wealth management and financial planning experts to curate its offerings. Currently it has 5 fixed portfolios that a user can choose from ranging from what is considered conservative (100% bond based ETF’s) to more aggressive (100% equity based ETF’s).
The company leans heavily on its collaborative approach to wealth management, as children’s friends and families can send kids capital that may be accompanied with sentimental messages, photos and videos.
Because EarlyBird is a custodial account, the capital can be used for non-education purposes, whereas the similarly modeled 529 Plan can only be used (without adverse income tax consequences) for tuition, room and board, and other education based intentions.
Investment giant Acorns also offers a financial wellness arm for kids coined Acorns Early; however, it functions as a Universal Gifts to Minors Act (UGMA) and UTMA (Uniform Transfers to Minors Act). Compared to a 529, UTMA/UGMA account have a less favorable financial aid impact. When it comes time to fill out the FAFSA (Free Application for Federal Student Aid), UGMA and UTMA accounts are reported as a child’s asset, reducing aid eligibility by 20% of the asset value.
“Investing tools today are only available to families with investing knowledge and experience building generational wealth. We have a bold vision to make investing available for everybody,” said Caleb Frankel, EarlyBird COO. “We are driving wealth creation not within the system of today, but for the world of tomorrow.”
With its latest round of funding, EarlyBird said it will continue to scale its engineering, product, marketing and operations teams, and introduce the ability for users to invest and gift assets beyond stocks and ETFs, including cryptocurrencies.
“I got a savings bond from my great aunt when I was born in 1983. No one is giving savings bonds anymore – we need an onramp to modern wealth creation for the next generation,” said Alexis Ohanian, Founder of Seven Seven Six. “We believe EarlyBird’s vision – sitting at the intersection of community, love and capital – aligns well with how all the ‘rules of investing’ are currently being rewritten.”