Cleo, the London-based fintech that offers an AI-powered chatbot as a replacement for your banking apps, continues to put together an impressive list of backers. The startup’s early investors already include Entrepreneur First, Skype founder Niklas Zennström, Wonga founder Errol Damelin, and LocalGlobe, the seed VC firm founded by father and son duo Robin and Saul Klein, amongst others. Now TechCrunch can reveal that TransferWise founder Taavet Hinrikus has become a Cleo investor and advisor.
In a call with Hinrikus last week, he explained that the investment came about after he kept hearing of Cleo and its co-founder and CEO Barney Hussey-Yeo from various contacts in the London startup scene. The pair met up around 6 months ago and after learning more about the company’s vision, the TransferWise founder wanted in. “The guy is very low-key, hands on building, [and] focussed on solving a customer problem,” says Hinrikus, “so I was really impressed with that and said, ‘hey, if I can join the party, I’d love to’. And he said, ‘sure, come onboard’.
It’s a proactive bank, it’s a bank that talks to you. Taavet Hinrikus
The customer problem Cleo has set out to solve, as articulated by the TransferWise founder, is helping millennials “live with their money”. The Facebook Messenger chatbot gives insights into your spending across multiple accounts and credit cards, broken down by transaction, category or merchant. In addition, Cleo lets you take a number of actions based on the financial data it has gleaned. You can choose to put money aside for a rainy day or specific goal, send money to your Facebook Messenger contacts, donate to charity, set spending and alerts, and more.
“It’s a proactive bank, it’s a bank that talks to you, and tells you on a Monday morning, ‘hey, you know, you can spend £100 this week’. And that’s really valuable for these people,” says Hinrikus. “I think there are a lot of millennials that are super happy with the product. What’s going to come of it, who the hell knows? It’s a long journey ahead, but it’s exciting. Starting by solving one pain-point for these people, there’s a ton of things you can do”.
Cleo’s recent (albeit tentative) U.S. launch hasn’t gone unnoticed, either, with Hinrikus describing growth across the pond as “super impressive”. I understand that Cleo hit 200,000 users in April, and is growing by 3,000 users a day, with the U.S. driving over half of that growth. The company is eyeing up further international moves, too, something the TransferWise founder is well-positioned to help with as one of the few European founders that has scaled a consumer-facing technology company globally.
Maybe I think too highly of myself, but I think maybe sometimes I can give some good advice. Taavet Hinrikus
“I get a kick out of helping the next generation of founders,” he says, citing recent investments in Juro, and Open Cosmos, along with Cleo. “There are lots of people building the next TransferWise, not in a sense of competing with us, but in a sense of building large successful companies that are doing something important. I just enjoy helping these founders navigate the journey. Maybe I think too highly of myself, but I think maybe sometimes I can give some good advice — sometimes bad advice, I’m sure — and I think that’s a way of giving back”.
One interesting aspect to Cleo’s global ambitions is the potential speed the U.K. startup can move at because of the decision not to become a bank in its own right, which would otherwise bring significant capital and regulatory friction. Cleo co-founder Barney Hussey-Yeo has always said that “nobody needs to be a bank to replace your banking app,” especially in light of Open Banking/PSD2 regulation, which is forcing banks to let customers share their data with third-party apps of their choosing.
“I think you can do a lot in the Open Banking way. I think the tools out there are still a couple of years away… [but] PayPal is not a bank, TransferWise is not a bank, Revolut is not a bank, and Cleo is not a bank. Yet you can still do a lot of great stuff,” says Hinrikus.
Meanwhile, although Cleo has begun to experiment with monetisation, including earning affiliate revenue when persuading users to switch gas and electricity providers, the startup’s latest investor describes those efforts as “peanuts” and says it is barely scratching the surface of what’s possible. “There’s a gazillion opportunities,” he says. “If you think about insurance, if you think about investing, if you think about credit, there’s so much you can do. It’s really about being smart and choosing which ones to double down on… If you want to build a really big business, then credit may be the most important”.