Peter Thiel’s VC fund backs climate-aware fintech TreeCard
TreeCard offers users a spending and money management platform linked to a debit card made of wood.
Three cards
TreeCard, a climate-conscious digital money app, raised $23 million from investors in a new round of funding.
Founded by British entrepreneur Jamie Cox in October 2020, TreeCard is a new concept in the fintech world. It offers users a platform for consumption and money management linked to a debit card made of wood.
The firm uses 80% of the profits it makes from card exchange fees to plant trees through a partnership with the green search engine Ecosia. TreeCard has so far planted more than 200,000 trees.
The deal underscores increased interest from VC investors in companies that address climate change. Funding for climate technology startups will reach a record $111 billion in 2021, according to a report by UK startup network Tech Nation.
“There are hundreds of millions of people in the world who are changing their behavior based on the environment,” Cox told CNBC in an interview. “There is no super app for the environment yet.”
Superapps act as all-in-one platforms that serve a variety of user needs that include instant messaging, banking and travel. Cox envisions TreeCard becoming a climate-focused super app—his app includes a game that lets users visualize how many trees their activity has helped produce, for example.
Peter Thiel’s Valar Ventures was the largest investor in TreeCard’s round, while EQT, Seedcamp and the climate-centric venture capital firm World Fund also chipped in. Valar is a prolific fintech investor, having taken stakes in the likes of Wise and N26.
The platform, which is still operating in beta test mode, plans to use the funding for an official launch later in 2023. In addition, TreeCard will use the money to grow its team of around 30 people, with the goal of almost doubling in size.
TreeCard is currently only available in the US, with a waiting list of more than 250,000 customers. There is now a gradual introduction of users. TreeCard plans to launch in the UK and Europe, “hopefully soon,” Cox said.
Although based in the UK, TreeCard chose the US as its launch market. The US has been a tough place for rival European fintechs. Monzo withdrew its application for a US banking license, while N26 closed its US operations completely.
TreeCard is not a bank itself, but offers its accounts through Sutton Bank, a regulated lender.
The TreeCard app includes a game that allows users to visualize how many trees their activity has helped produce.
Three cards
Higher prices on the fees merchants must pay each time a customer uses their card to spend make the United States a more lucrative opportunity than Europe, TreeCard’s CEO said.
But according to Cox, what European fintechs often get wrong in the US is that they don’t realize “what kind of requirements for a financial product are very different from Europe.”
“When financial-type companies come from Europe, they don’t deeply understand the American audience,” he told CNBC.
“Rewards are almost always at the center of consumer products in particular, but many financial products. It’s more of an afterthought in Europe.”
TreeCard offers customers up to 3% annual interest on their deposits, a feature it offers through third-party providers.
“The commitment there is that your funds are not used for fossil fuel investments,” Cox said.
Banks have channeled huge sums of money to support fossil fuel companies over the years. Analysis by campaign groups Urgewald, Reclaim Finance and more than two dozen other NGOs found commercial banks channeled $1.5 trillion into the coal industry between January 2019 and last November.
TreeCard’s financing also defies some of the problems facing the fintech sector, where firms are putting listing plans on hold and cutting spending to prepare for a likely recession. Klarna, the buy-now-pay-later firm, saw its valuation plunge 85% in July and laid off 10% of its workforce.
“We’re going to hire, but we have to be careful,” Cox said. – The environment is different than last year.
He added: “The key is that over the next year and a half, companies will probably have to find ways to grow that aren’t just conventional, ‘plowing lots of money into Facebook ads and getting users.'” It’s not going to to be the sustainable model for growth.”
While at university, Cox founded a company called Cashew, which he described as “Venmo for the UK.” He later joined Peter Thiel’s Thiel Fellowship, a two-year entrepreneurship program, where he launched cloud computing startup FluidStack.
