Kenji Niwa, an immigrant entrepreneur, experienced the challenges of getting financial products, including a credit card, without a credit history when he moved to the U.S. in 2017 to get his MBA at UC Berkeley. Niwa realized that the issue is not just for international students who undergo financial stress in the U.S. — local college students were also dealing with the same problem due to poor credit scores.
“[About] 50% of college students do not have a credit card because they are afraid of overspending and application rejection,” Niwa, CEO of Firstcard, told TechCrunch. “Twenty-nine percent of Gen Z consumers don’t have a credit score or don’t know if they have one,” Niwa added, citing a recent study by FICO.
Niwa and CTO Daniel Junqueira co-founded Firstcard in 2020 for domestic and international college students to offer a suite of financial products that help them build better credit and succeed in their financial journey. The three-year-old outfit said today it has raised a $4.7 million seed round, which brings its total raised to $7.7 million.
“We believe that a good credit score is an essential prerequisite for students’ financial future and everyone should have equal access to finance products, with or without credit history,” Niwa says.
As its first step, the startup launched a debit card, Credit Builder Card, this month, initially for students out of Stanford and UC Berkeley.
Firstcard offers a bank account for students, allowing them to earn cash back at more than 29,000 select hyperlocal merchants up to 15%. The debit card has no annual fees and doesn’t require minimum deposits or credit history. The startup says users can earn savings with a 1.25% annual percentage yield (APY) with Firstcard and up to 4.25% APY with Firstcard Plus.
On top of that, Firstcard intends to build communities for college students and plans to offer financial aid and student loans in the future. “We see that the credit issue is the epitome of the larger problem of a lack of financial tools and education for students,” the CEO says. “Only 22 states require students to take financial literacy courses, leaving many students unprepared to manage their own finances coming out of college.”
The startup’s upcoming features will include an artificial intelligence-powered financial advisor tool to enable users to save money and build credit by analyzing their financial behavior and offering solutions to earn bonus APY for savings. Moreover, it will provide financial education content.
Competitors in the fintech industry include neobanks. Though some of the peers offer credit offerings like cashback or APY, they are lower than Firstcard, Niwa says.
It will monetize in three ways: interchange fees, a $3 monthly subscription fee for Firstcard Plus users and interest revenue of unsecured credit cards, which is not launched yet.
Firsthand is not Niwa’s first startup. Before moving to the U.S., Niwa had sold his previous company, i Tank Japan, a human resource platform that provides internship and job information for college students, in 2015.
The company will use the proceeds to double down on its product development and marketing.
The latest round included angel investors and venture capital firms, including AngelList Early Stage Quant Fund, CyberAgent Capital, East Venture and Japanese soccer player Keisuke Honda participated in its previous funding.