Digital wallet Eco has raised $60 million in a Series B funding round co-led by Activant Capital and L Catterton, according to a Tuesday release. The round arrived just four months after the digital global cryptocurrency platform picked up a $26 million round in March.
Founded in 2018, the SF-based startup’s platform is designed to be used as a payment tool around the world for daily-use transactions emphasizing that it’s “not a bank, checking account, or credit card.”
In an interview with Eco CEO Andy Bromberg, Bromberg told FinLedger the goal is to give users a single wallet and tool for spending, sending and saving.
“Our belief is that we can leverage better infrastructure, a more aligned, more compelling product experience and provide a better option than the banks,” Bromberg said.
The functionalities of the tech are still fairly limited. The app is currently only working with Amazon, Uber Eats, InstaCart and DoorDash, but Bromberg said this latest round will help to integrate more.
It functions by first connecting your bank account and depositing money into the app. Once your money is in there, it starts earning 2.5% APY. If you refer friends that can go up to 5% APY. And then you can begin spending money at these merchants.
Bromberg explained that, once in the app, users click on the merchant they want to buy from and decide how much they plan to spend. Eco then generates a code that can be entered into the merchants checkout for exactly that amount. By the end of the transaction, that 5% cash back automatically kicks in.
Though Eco prides itself on overcoming the antiquated processes of a bank, the money still has to come from somehwere — which for Eco means banking partnerships. As of right now, the firm does not want to disclose who those are.
Regardless, the tech is already fairly popular. The Eco app is currently available but is boasting a waitlist of 180,000 users that have yet to gain full access.
“Eco individually onboards all of its users. We think FinTech has taken a wrong turn just gunning people straight in to as many apps as possible. But this is your money, and your financial life, so we want to make sure you fully understand,” Bromberg told FinLedger.
The idea of a 5% kickback is also incredibly enticing for users. Bromberg explained the reason the company can afford such a rate is because of the way they are accessed.
“Right now, there’s not enough dollars in the crypto capital markets, which means borrowing rates are really high,” Bromberg said. “So we go to regulated financial institutions that access the crypto markets, and users lend them USDC (stablecoin) via the Eco. So we’re able to access way better rates.
Now, the big caveat there, and it’s something we’re very transparent about, is that it’s not FDIC insured,” Bromberg said. “And that’s the trade off that I think users have to make.”
Going forward with a total of $86 million in funding raised, Eco plans to hire both in the customer success sphere to work through the thousands of users on the waitlist, as well as its engineering department to grow out its platform.
Bromberg also disclosed Eco’s bigger goal of a universal rewards system via the platform. Essentially, Bromberg wants to take the concept of Amex points and give them real world value — the equivalent of an alternative digital currency.
“I think there’s a progression from reward point to reward currency there,” Bromberg said. “Whereas something can become more broadly useful. And that would be a really interesting more aligned world to live in than the one we live in today.”