Tim Sheehan only has to look at his own household to see the global applications for the financial technology company he founded.
Three of the Greenlight Financial CEO’s four children have used its accounts to kickstart savings toward study-abroad trips to Germany and Spain.
Starting with the eldest, each raised $900 through odd jobs and allowance, with Mr. Sheehan and his wife matching the funds.
“That was our way of making sure that the kids really wanted to go,” Mr. Sheehan said.
As they traveled, their spending money was deposited digitally onto a Greenlight debit card to be used on the Mastercard network anywhere in the world.
Abroad or at home, parents on Greenlight’s controls can restrict spending to certain categories like gas or food, or even limit card use to individual stores — a patent-pending solution developed in house at the maturing Atlanta tech company.
The scenario exemplifies the broader promise of Greenlight, where the spending function is an introduction into a more comprehensive solution that helps parents raise financially fit kids. With $54 million raised in a series B round last week, the company is inching closer to its ambition to bring financial literacy to the next generation.
“It’s more than just providing a way for parents to give their kids money and have control over where it’s used,” Mr. Sheehan in an interview with Global Atlanta.
Positioning itself initially as a “debit card for kids,” Greenlight also has app that allows parents to manage chores and deposit money into a supervised account. Kids can set up separate giving or savings accounts and earn “parent-paid interest” — a feature that came straight out of Mr. Sheehan’s childhood. His parents would offer $10 or $20 incentives when the kids reached certain goals.
“Parents can essentially exaggerate the point to make the point like my parents did, giving this kicker to the kids so they have a positive association with savings. What really happens is that savings starts to become a habit, and now they have this healthy financial habit that they take with them into adulthood,” he said.
So far, Greenlight’s 500,000-plus users — an average age of 13, with the parents aged around 40 — have collectively saved more than $10 million. An investing account is in the works and should be operational within a few months.
Mr. Sheehan began conceptualizing Greenlight while working as Entrepreneur in Residence at Georgia Tech’s Advanced Technology Development Center, where he met his co-founders. By then, he had already started and exited multiple companies and worked at Yahoo Finance, Etrade and Fiserv.
Carrying less cash themselves, Mr. Sheehan and his wife found it frustrating to dole out allowances, movie money and field-trip fees. He began wondering if other parents felt the same pain. Two surveys later — first with 100 random parents, then 2,000 respondents online — gave him all the evidence he needed.
“I started putting all this together in my head and I thought, ‘This is something real,’” he said. “Parents aren’t carrying cash as frequently, and they all have the goal of wanting their kids to be smarter about money.”
But it wasn’t enough just to smooth out the process of transferring money between parents and kids. Mr. Sheehan wanted to transfer the kind of knowledge that would help kids build wealth for the long run.
“I don’t want them to just have a solution that helps them spend. I want them to learn to save, because unexpected things happen in life and you need to be able to handle that expense,” he said.
Mr. Sheehan learned young. His father was an economics major at Boston College and later worked at the U.S. Office of Management and Budget. Over time, he taught Tim the magic of compound interest, the importance of investing in what you know, the utility of deferring a good purchase now for a better one later — tradeoff decisions in econ-talk.
After reading books about Warren Buffett’s strategy and his famous letters to shareholders, along with Peter Lynch’s books on private equity, Mr. Sheehan eventually saw Google’s prospectus and invested much of his personal retirement account into the young company’s initial public offering. People thought he was crazy. It paid off.
“I learned a ton from my folks and from those books, and honestly I really wanted everyone to get the benefit that I got. That’s honestly where it’s coming from,” Mr. Sheehan said. “I’ve done several companies, but I feel like this could be the one where I really make a big, positive impact on society, so I’m really excited that it’s doing so well.”
He picked the right time, as Americans are having trouble with their savings. A Federal Reserve Board report last year warned that 40 percent of Americans couldn’t cover a $400 emergency expense. Financial literacy is rarely taught in schools, and borrowers have piled up trillions in student loans and credit card debt.
Greenlight, Mr. Sheehan says, could be one instrument for changing that equation, positively impacting kids for decades to come.
“It could really make their lives better or at least less stressful if they’re able to learn a lot of those key financial concepts early in their lives,” he said.
The company is laser-focused on the U.S. market at the moment with no immediate plans to go overseas, despite the fact that the distance and independence in study-abroad trips make them a nice on-ramp to the service.
With the new investment round, Greenlight aims to aggressively acquire customers, which it’s doing mostly via online marketing campaigns and word-of-mouth on social media. That includes the Greenlight Insiders group on Facebook, where users provide feedback that has led to many new features.
Greenlight is growing quickly, now employing more than 100 at its headquarters at SunTrust Plaza downtown, which features open spaces, concrete floors, a well-stocked snack bar and the occasional pingpong match.
Atlanta, a fintech capital, has been a hospitable home, with its rich talent base and proximity to engineers from Georgia Tech and elsewhere. It’s also a great place to raise a family — the nucleus of the customer base paying $4.99 per month for Greenlight’s service.
Asked what the city could improve, he said more people should know about the ATDC, the state-funded incubator that helps get companies like his off the ground. Even with his tech pedigree, he had to hear about it from his wife, who met an ATDC employee at a tennis match.
Greenlight’s latest investors include large banks like JPMorgan Chase and Wells Fargo, which Mr. Sheehan said have caught the firm’s broader vision.
“They are all excited about all the learning opportunities inside of Greenlight,” he said of what drove their decision. “It’s the mission.”