French startup Green-Got is building an alternative to your traditional bank account with a focus on climate change. Essentially, Green-Got guarantees that your savings and the money that is sitting in your bank account aren’t going to finance fossil fuel projects and other polluting industries.
The startup recently raised a $5.5 million (€5 million) funding round led by Pale Blue Dot. The community of Green-Got’s customers contributed nearly €2 million to this funding round. Green-Got managed its equity crowdfunding campaign through Crowdcube with around 1,300 investors.
As a neobank, Green-Got doesn’t want to stand out when it comes to its feature set. Clients can create an account using Green-Got’s mobile app in just a few minutes. They get a current account with a French account number. A few days later, they receive a debit card.
That card works with Apple Pay and Google Pay. And the startup doesn’t charge any foreign transaction fee on top of Mastercard’s exchange rate. Every time you make a purchase with your card, you receive a push notification on your phone in just a few seconds.
In other words, Green-Got ticks all the right boxes when it comes to providing the basic banking features. “We're providing the best features from Revolut and N26 that have convinced many users, but at the same time you have the best of impact finance,” co-founder and CMO Maud Caillaux told me.
What makes Green-Got different is that the startup wants to focus on one vertical in particular — and that’s climate. Over the past few years, several studies have shown that big retail banks invest in multinational energy corporations that finance invasive fossil fuel projects. And that’s just the tip of the iceberg, as there are many companies that don’t necessarily work in this industry but still produce large emissions of greenhouse gases.
With Green-Got, customers know for sure that their money isn’t going to finance these types of companies. Green-Got isn’t technically a bank, it’s a payment institution that partners with a bank (Crédit Mutuel Arkéa). When customers hold money in their account, that money isn’t invested in any way. It just sits there, waiting for the next cash withdrawal.
When it comes to consumer-facing features, Green-Got showcases the carbon dioxide equivalent (CO2e) of your card purchases so that you can get a sense of your personal impact on the environment. For instance, spending €500 on Air France’s website probably means that you made a purchase with a large climate impact compared to spending €500 at a second-hand bike shop.
The startup generates revenue from subscriptions. An account costs €6 per month. There is no free tier as the company is prioritizing sustainable growth over growth at all costs. There are currently 13,000 paid customers.
If you’re familiar with neobanks, you may know that fintech startups also generate revenue from interchange fees. Every time you pay with your card, the card transaction fees are split between the merchant’s bank, the network provider (Mastercard for instance) and the customer’s financial institution (Green-Got in that case).
Green-Got doesn’t want to generate revenue from these fees. That’s why the company has selected a few nonprofits with its customers so that Green-Got can make donations based on those interchange fees. “It represents hundreds of thousands of euros,” Caillaux said. The startup will soon enable payment roundups for donations as well.
In the future, Green-Got also plans to launch savings accounts in the form of assurance-vie contracts. The company is evaluating and handpicking all the financial products that are going to contribute to the basket of investments because certifications aren’t enough when it comes to funds.
Generali will manage the contracts on the behalf of Green-Got. “It is as if we have the recipe for the cake and they have the factories to make the cakes,” Caillaux said.
Neobanks have been around for a while and many people are now familiar with the concept. A few years ago, many entrepreneurs wanted to start a "neobank for x," but that trend faded away. Green-Got arrives on the market a bit later but could also avoid all the pitfalls that come with running a neobank.
In addition to more generalist challenger banks, Green-Got competes with traditional retail banks that are trying to incorporate climate impact in their priorities, such as the Crédit Coopératif or La Nef. It’s going to be interesting to see how big Green-Got will become in the coming years.