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Step's $300 million debt round

Oct 11, 2022
Illustration of a piggy bank looking up as a crypto coin floats above it

Illustration: Sarah Grillo/Axios

Step, a teen banking startup backed by stars like Justin Timberlake and Charli D'Amelio, raised $300 million in debt funding and officially launched into crypto trading.

Why it matters: Step's expansion into crypto and soon, stock trading, will diversify its revenue away from interchange fees at a time when investors are beginning to question if the traditional card-swipe model is enough to support growth.

Details: Starting with bitcoin, Step will roll out about 40 different tokens in coming weeks in partnership with Zero Hash.

Context: The deal also comes at a time when debt funding is on the rise as cheap equity capital dries up.

  • Step raised $100 million in Series C funding at a near $1 billion valuation last April. General Catalyst led the round with Coatue and Stripe also participating.
  • Though the timing now would be right for another equity round, CEO CJ MacDonald tells Axios the company had not been looking to raise more funding, adding "capital in general is expensive. Debt is non-dilutive."
  • The company declined to reveal its revenue, revenue growth, or profitability, but said the company had 3.5 million users.
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