A healthcare platform for young people and a finance platform for teens lead this week’s investment announcements.
Millennials (born 1981–1996) and Generation Z (born 1997–2012) combine to comprise over 42% of the U.S. population. Millennials already out-number Baby Boomers, and Gen Z will overtake Boomers in the next few years. As children of the internet age, Millennials and Gen Z bring new consumer behavior trends to the marketplace, and small business owners should keep these customers in mind when developing their business plans.
Mountain Health Technologies has designed a healthcare platform for Millennials at an affordable price. Mountain is a simpler healthcare solution, one that focuses on the essential services that Millennials need most: wellness, sexual health, and women’s health. For a flat rate of $30 per month, members receive unlimited virtual healthcare appointments and at-home STD testing. Members receive one in-person doctor visit per year via a network of partner clinics that include MinuteClinic and CityDoc, and additional doctor visits are just $99. The startup recently raised $1.5 million in seed funding from a consortium of investors that included Matchstick Ventures and Techstars. The capital will allow the Dallas-based company to expand nationwide.
Since Millennials and Gen Z already comprise the dominant segments of the workforce, their combined expenditures will be the drivers of the nation’s economy, so it’s not a surprise entrepreneurs are targeting those demographics. But did you know that teenagers, which comprise 15% of the U.S. population, spend a combined $130 billion per year? Amounting to about $2,600 annually per person, most of this money is spent on food and clothes.
To help our economy’s newest consumers, Wingocard has developed a mobile app specifically designed for teens. It allows parents to transfer money to their teenager’s account and monitor how it is spent. It comes with a pre-paid Visa card so teens can spend. COVID-19 has hastened our move to a cashless economy, and Wingocard will allow teens to be financially educated when it comes time to get their first credit card. After raising $2 million in seed funding, Wingocard will launch this fall in the Canada and the U.S. They already have 50,000 teens on their waiting list. The funding round was led by Diagram.
A few other interesting startups caught my eye this week:
Aside from surveys, we have lacked hard data as to COVID-19’s impact on the economy. That’s beginning to change, however, as second quarter reporting is being anounced. This morning, the Commerce Department announced a decline in the GDP of nearly 33%, the worst single-quarter drop ever. And it (obviously) would have been worse without the trillions of dollars in relief aid the government provided. Key areas of decreased spending include gasoline, clothes, dining, transportation, and hotels, which is no surprise since most consumers were forced to stay home most of the spring. Areas that saw increased spending, though limited, included automobiles (up almost 7%) and recreational goods and vehicles (up 55%!).
On the heels of this troubling news, the eyes of economists have turned towards Facebook, which reports its earnings tonight. Why does a social media platform’s performance matter to small business? Facebook drives as much as 75% of its sales from advertising and much of that from small businesses. Digital marketing trackers anticipate that Facebook advertising spend is down 20–30% year over year.
This brings into focus the need for more government relief, and we’re no closer to that than we were a week ago, when the Republicans announced their version of the next coronavirus relief act.
Unemployment and eviction protection have become the critical discussion points, but their small business packages differ greatly as well. While both parties seek to continue the Paycheck Protection Program (PPP) for businesses that can prove a 50% revenue loss, the Republican’s proposal does not include additional funding for the Economic Injury Disaster Loan (EIDL). In addition, the Republican bill would like to limit the relief to companies with fewer than 300 employees, while the Democrat’s bill would limit it to 100 employees. Joe Biden weighed in as well, and said half of all all future small business relief money should be limited to businesses with 50 or fewer employees. (Politico)
According to a story from CNBC, 35% of small business owners have been forced to prop up their businesses by tapping their own savings, or worse, credit cards and hard money loans. Analysts fear that many of these businesses are digging holes that will require more than relief, but will need a full stimulus package for the economy to recover. (CNBC)
Ben Worsley is Marketing & Creative Director at Masterplans