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This Female Founder Continues To Make Fintech Splash With UNest

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This Female Founder Continues To Make Fintech Splash With UNest

You might think, due to the coronavirus pandemic, that parents wouldn't have extra money to scrape together for college.

Not true, says Ksenia Yudina, CEO and founder of UNest, a revolutionary and simple user-friendly college savings app that allows family members to save for a child's education through a 529 college savings plan. The demand for UNest has resulted in more than 25,000 users despite the COVID-19 pandemic.

Yudina’s journey has taught her that all families are different, but, she says, “All share the same desire — to do the best thing for their kids.”

Yudina’s Friends Ask Questions

Yudina didn’t set out to launch a fintech startup right out of graduate school. In fact, she worked as a Certified Financial Advisor (CFA) for Capital Group American Funds, the nation's largest provider of 529 plans. 

What ignited the spark?

“I started getting questions from my friends. They all graduated with student loans. I graduated from UCLA with $180,000 in student loans,” she says. “It creates so much financial burden for people. At the same time, they have kids and are wondering, ‘How can we start saving?’”

She proposed her idea at Capital Group — to simplify 529 plans, without a 16-page application (Capital Group’s requirement) — and got some bureaucratic pushback. 

Yudina said she also worked with a lot of high-net worth families at Capital but wondered, “What about everyone else?” 

Yudina wanted to make 529 plans accessible to all — at an affordable price. Taking inspiration from Acorns and Robinhood, she knew she needed to develop her own app.

But how?

Diving Into Fintech As A Female

Yudina didn’t know much about approaching venture capitalists or raising funds. She needed a team and invited Peter Mansfield, UNest chief marketing officer, on board. Yudina chipped in $160,000 of her own money and an angel investor who knew her put in $300,000.

She said in one funding meeting (which seemed to go well), the VC asked how Mansfield had “found her.” 

“I’m the CEO,” she recalls replying, and the VC blinked in surprise.

Despite what she describes as a bias in the male-dominated fintech world, she’s navigated the fintech space with success — her ideas have spurred her through the company’s Series A round. 

Funding Journey

“Our seed round was the most complex and involved a lot of travel around the country and meetings with multiple venture funds and angel investors. We spent about five months traveling and attending multiple conferences until the round came together,” says Yudina.

“The seed extension came shortly after our seed round, purely based on the demand from existing investors. It was based on the team additions and progress we made with the initial investment.” 

UNest’s Series A funding was started and completed in the middle of the pandemic.

“Our initial concerns were quickly dispelled based on the enthusiasm of our existing investors to further support the company. This made conducting the round online and on Zoom more productive, in some respects, than our seed round that involved a lot of travel,” she says. In fact, it took only a month from start to finish. 

It helped that there were some stellar metrics involved.

“This made it significantly easier to keep our valuation at a very good spot — it was a pretty big jump from our seed extension, which we completed at the end of 2019,” adds Yudina.

UNest raised $2 million in August 2019 and an additional $1 million in the extended seed round in December 2019. The most recent results were a $9 million Series A round. Investors include:

  • Anthos Capital
  • Northwestern Mutual Future Ventures
  • Artemis Fund
  • Vested Ventures
  • Draper Dragon
  • Unlock Venture Partners
  • Pasadena Angels
  • Band of Angels
  • Group 11

Educating Families

The UNest app only costs $3 per month, in addition to underlying management fees and fund expenses. Yudina has tried to simplify the process through UNest — but she says parents still need education. “At the risk of overcategorizing the market, there are two primary ways that parents learn about 529 plans and each has significant flaws that have prevented wider awareness,” says Yudina.

State-sponsored plans and financial advisors shoo people away, Yudina says.

State-Sponsored Plans 

Yudina says that government agencies are rarely known for their marketing prowess. “529 adoption has lagged because of well-intentioned, poorly packaged offerings to consumers. Adding to this, the backend infrastructure, record-keeping and investment partners that support the states have formed partnerships that in many instances are less about serving the public good and more about staying within overly cautious regulatory lanes,” She adds.

Financial Advisors

Yudina says advisors do not usually make as much money on 529s when compared to other financial solutions like retirement accounts.

“The focus for financial advisors and wealth managers is always affluent households. This prevents middle- and lower-income families from being made aware of 529s. Even within families that have access to a financial advisor, there is no guarantee that they will get pointed toward a 529,” she adds. 

“In addition, the overall marketing of 529s by the financial industry has been poor. Just consider the name — 529. It’s not exactly something that resonates emotionally with consumers!” Yudina adds.

“Seventy percent of people don’t know that 529 plans exist, including the people who need them the most,” says Yudina. She pinpoints how important it is to save a little bit every year but many families don’t know about their options. “At the same time, the people who do know, it’s so complex that the applications involved overwhelm them.”

How Is UNest Money Invested?

UNest gives parents a choice of five asset allocations based on your risk tolerance ranging from the most conservative to most aggressive. “However, we typically recommend age-based investment portfolios as the best option for our clients. These portfolios are tailored to the child’s age and the time until they go to college,” Yudina says. “The closer they are to college, the more conservative their portfolios become.”

UNest will recommend an optimal investment portfolio based on your child’s age and your timeframe. In addition, your investment portfolio will be rebalanced automatically (based on your child’s age) to achieve the most suitable asset allocation and reduce the investment risk as your child approaches college. The age-based portfolios are invested in low-cost investments, such as ETFs.

Each parent can contribute up to $15,000 a year ($30,000 per couple) toward a child’s account to qualify for the annual federal gift tax exclusion. You can superfund the next five years to accelerate up to $75,000 per parent ($150,000 per couple) using a one-time deposit option. 

You can also create a monthly plan and contribute to your child’s account regularly and consistently to avoid investing at an unfavorable time.

Listening Along the Way

Yudina continues to listen to parents for inspiration — from her friends (who are all customers) to her brand-new customers. She realized that parents always want to know how to save for college and other things as well, such as retirement and other goals. 

Listening carefully was the primary driver behind UNest’s newest offering. 

What are they? 

“Custodial accounts that allow parents to also save for other life events and goals, beyond just education,” Yudina says with a smile. 

Check out the latest at UNest.

 

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