Teens are crypto-curious: Our investment in stack
Stack Co founders Natalie Young, Will Rush and Angela Mascarenas
Insight
Recently, we did a deep dive into Web3 and identified tools and experiences to make Web3 and Crypto available to consumers as a key area of interest for Madrona. And today, we’re 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.
Stack is positioned to create a new category by being the first education-focused crypto application for teenagers. The Stack app differs from apps like Coinbase and Robinhood in that it allows users to access the tax and control benefits of a Uniform Transfers to Minors Act (UTMA) account while giving crypto-curious teenagers legal access to a trading environment built specifically for for them. At the age of majority, assets are transferred to the teenager’s name.
Fiat and banking products under the age of 18 have seen incredible growth fueled by social media in recent years. Teenage 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 to take responsibility and control over their finances in the process. Research suggests that 71% of Gen Zers prefer financial information from people who look like themselves, which has resulted in them turning to the growing number of “fin influencers” on TikTok. The hashtags #FinTok and #Investing have more than 500 million and 3.7 billion impressions respectively. With increased interest in investing, fiat products under 18 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 minors – the next generation of consumers – who are 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 teenagers. We met the Stack team when they participated in, and won, the Madrona Venture Labs (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 confidently educates the next generation about finance and crypto through doing versus reading or watching.
With his founding team, Natalie Young and Angela Mascarenas, Will prioritizes 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 about savings 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 (which must be approved by the parent.) Parents can set trading and investment limits for their children, and Stack requires all transactions go through the platform instead of allowing users to move assets off-chain, thus eliminating the main valve for fraud.
The team at Stack has built this in collaboration with their customers. They created a high school ambassador program to engage early adopters and design a fun, educational product that complements teens’ current financial, technology, and Web3 interests. The team has a number of high school-based investment clubs around the country interested in getting into the initial rollout. We think Stack’s 5,000-person waiting list for the iOS or Android app is impressive.
Stack’s business model is thoughtfully designed around education rather than trading incentives. Unlike over 18 crypto exchanges, Stack makes money on a subscription basis, not on a per-trade basis. Users are also served content that is served daily in the app and receive crypto as an incentive to watch.
Over the last 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 by their traction and passion and are excited to invest and help them grow. In addition, we believe that the Seattle Web3 ecosystem is on an upward trajectory and will be of increasing interest to Madrona. Stack launched its Android app a few weeks ago, which people can download from the app store. The iOS app is just around the corner, and we’re excited to have it available to consumers.
