Eco is raising another $60 million to propel its early hit stablecoin crossover as regulators turn up the pressure on the sector.
The fiat-input, cashback-granting digital wallet and stablecoin platform is not even five months removed from its $26 million pre-seed. But CEO Andy Bromberg said Eco’s user base has swelled since that March debut, and the company is ready to speed up its growth.
Eco is part of a wave of fintechs hawking bank-like services to a fiat audience – but one of the few with a crypto back-end: Returns on clients’ deposits (which are handled by Wyre) are generated as they are lent out to institutions in the form of stablecoin USDC.
That model may come under scrutiny as world regulators probe the stablecoin sector with new force. Crypto lender BlockFi’s interest accounts are under local fire for alleged securities violations and executives at Tether, the mega stablecoin issuer, are reportedly in federal investigators’ crosshairs over criminal bank fraud.
“We are watching the cases really closely,” Bromberg said in an interview before the latest Tether developments, “and are going to make sure that whatever we’re doing is in alignment with the latest understanding of every regulation that exists.”
Nonetheless, he said Eco “has not been convinced yet” by Vermont, Texas, New Jersey and Alabama’s allegations that BlockFi’s service is an unregistered security, a claim that could have ramifications for businesses like his.
Eco, which began life as a full-on crypto startup, isn’t so showy now about its usage of services lending fiat as USDC. But the high efficiency model is how the startup puts its users’ dollar deposits to work.
“I think it’s under-appreciated by a lot of people, how many reasons there are for dollar-denominated demand in the crypto markets,” Bromberg said.
Private equity firm L Catterton and Activant Capital, a previous investor, led the round, Bromberg said. Andreessen Horowitz (a16z), Lightspeed Venture Partners, LionTree Partners and Valor Equity Partners also chipped in.
Eco plans to double its 25-strong headcount in the next six months to accommodate rapid growth. Bromberg said he’s pushing to accelerate the product timeline and plans to hire designers, product managers and engineers accordingly.
A larger team could also help Eco work through a 180,000-deep waitlist, which, once onboarded, will more than double the startup’s existing user base.
“The waitlist is certainly bigger than onboarded users,” agreed Bromberg, who declined to state by how much.
He credited the practice of 1-on-1 onboarding with producing high conversion rates and deposits of $7,700, 20x higher than the average size.
UPDATE: 7/27/21 10:28 PM EDT: This article has been updated to better convey Eco’s stablecoin lending practices. It plugs into a Wyre API to handle user deposits, instead of doing it itself.