What's the one thing you couldn't live without?

Your phone, probably. Maybe coffee. Your dog. A functioning Wi-Fi connection. 

For me, it's my personal organisation system - which, I'll admit, is a painfully boring answer.

I've been tinkering with it for about five years. It's a bit mad, if I'm honest. But it works, because I’ve designed it entirely around the way my brain operates - chaotic, always jumping between things, completely useless without somewhere to put it all.

Hand it to someone else and it'd make absolutely no sense. It was made for one very specific, very disorganised individual.

Which is kind of the point.

The businesses that win are usually the ones that pick a specific, overlooked problem - the kind everyone else finds too complicated or too unglamorous to bother with - and solve it properly. Not for the idealised version of the customer. For the real one.

Cleo did exactly that. They looked at Gen Z - broke, impulsive, living pay check to pay check - and built something that actually worked for that “person”.

And raised $175M doing it.

Bad with money? Congratulations, you're someone's business model.

1/ A London fintech called Cleo built an AI financial assistant that roasts you for your spending habits - and just raised $175M doing it

2/ Every bank had already written off Gen Z as too risky and too expensive to serve. Cleo saw the same group and saw an enormous, untapped market

3/ The product works because it's built for real human behaviour - impulsive, chaotic and deeply uninterested in being lectured about money

4/ The raise didn't happen because investors took a punt. It happened because by the time the cheque was written, Cleo had 7 million users, $135M in revenue and was actually profitable

Cast your mind back to 2016. The fintech boom was in full swing. Monzo and Revolut were making banking more slick for young professionals. Everything was cleaner, faster, shinier than before.

Barney Hussey-Yeo looked at all of that and went in a slightly different direction… 

He went after Gen Z. The broke ones. The impulsive ones. The ones living pay check to pay check with no savings buffer and no real idea where their money was going. The ones every bank had already decided weren't worth the hassle.

And look - I've got genuine sympathy for that generation. It's easy to look at the spending habits and roll your eyes, but the economy has been unkind to them. Rent, utilities, food - all going up in real terms while wages have barely moved. The money just isn't there, and no budgeting app is going to fix that.

Which makes it all the more striking that the financial industry keeps building for people who are already sorted. I was walking through Sloane Square the other day and clocked a crypto exchange advert where the balance on screen was over half a million quid.

Says everything about who they think is worth serving.

But anyway, Cleo took a different direction. £2.2M seed in 2017, a small London team and a pretty straightforward idea: create something that works for people who are struggling with their cash flow - not for the idealised version of them, but the real one.

And the product isn't wildly revolutionary, if I'm honest. You could get similar guidance from ChatGPT or from features already sitting inside Monzo. But that was never really the point. What they figured out was tone. 

Instead of nudging you with the odd notification, it roasts you: 

"Really? Another coffee?" 

“Where are you going in all those Ubers, other than straight towards debt?”

“I’m learning so much about you. Like the $68 weekly Los Tacos spend. Is your gut microbiome okay?”

Strangely, that kind of sass made people actually want to open their banking app. In personal finance, that’s really quite rare. 

And they didn't stop there. 

Cleo gamified the whole experience too - asking users multiple choice questions about their spending habits, literally making you confront how much you dropped at Starbucks that week. There's even a weekly prize of $4,000 for people who take part. 

Suddenly, checking your finances stops feeling like a chore and starts feeling like a game you might actually win.

The practical features followed the same logic. If you're about to tip into an overdraft - which, for Cleo's typical user, is a very real and very regular threat - the app steps in before the bank does. Rather than sitting back and letting you get stung with a $35 overdraft fee, Cleo offers a $100 advance for four dollars instead. 

No credit check, no interest, no judgment. They assess eligibility through your transaction history rather than your credit score, which makes it accessible to exactly the people the rest of the industry had already turned away.

What Cleo built, essentially, is a financial product that works with human nature rather than against it. And when you look at what that translated to in terms of users, revenue and investor appetite - it's hard to argue with the approach.

In 2022, Cleo closed an $80M Series C - taking total funding to $175M and officially joining the unicorn club. A London fintech, serving financially stretched Gen Z, hitting a $1B+ valuation. Bold on the surface.

But this didn't happen because investors took a punt on a risky idea. By the time the round closed, there wasn't much left to argue about. 

Seven million users. 

$135M in revenue - roughly double what they made the year before. 

And they're actually profitable. 

For a startup serving people who are famously bad with money, that's a remarkable set of numbers. And when you understand the market they were sitting in, none of it is particularly surprising.

Think about it this way. Millions of people across the UK and globally are living pay check to pay check right now. That's an enormous chunk of the population with a daily financial problem and very few decent options. 

Banks looked at that group and saw risk. Cleo looked at the same group and saw volume. And volume, when you've got the right product, is what builds a highly profitable business.

That's the bit traditional finance keeps missing. Banks are wired to ask one question above everything else: will this person pay us back? 

Fintechs ask a completely different set of questions - what's the product worth, how widely can we distribute it and what does this business look like at scale? Different questions lead you somewhere different entirely.

So when Cleo walked into investor conversations, they weren't asking anyone to take a leap of faith on a difficult demographic. They were presenting a massive underserved market, a product people were already using and a business that was already turning a profit. Not a concept. Not a vision. Proof.

The $80M is now going straight into US expansion, deeper product development and what the CEO is openly targeting as $500M ARR. An IPO is on the table too.

Right market, right product, right time. The money followed naturally.

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Cleo has a thing or two to teach founders scaling their businesses. If you’re thinking about raising capital soon, don’t skip this:

The most overlooked markets are often the most valuable ones. Nobody had built something decent for financially stretched Gen Z - not because the demand wasn't there, but because the industry had written them off. 

Before you dismiss a customer segment as too risky or too complicated, ask whether the gap is actually in the solution, not the customer.

The closer your product gets to how people actually behave day to day, the stickier it becomes. Cleo built for someone who impulse-buys at midnight and dreads opening their banking app - and that's precisely why seven million people use it.

If your business looks risky on the surface, lead with the opportunity instead. The story you tell investors shapes everything - so make sure it's focused on what the business could be worth, not what makes it complicated.

Cleo's users avoid structured financial products out of fear, and end up paying $35 overdraft fees as a result. The same psychology plays out in business all the time. Good debt, used at the right moment, is a tool. 

The founders who get into trouble are almost always the ones who came to it too late, when options were limited and terms were bad. At FundOnion, this is something we see constantly - and it's almost always avoidable.

Seven million users, doubling revenue, profitable - that's the position Cleo was in when they raised. That's the position you want to be in too (well, not necessarily those exact numbers, but that energy). 

The worst time to raise is when you have no choice. The best time is when you genuinely don't need to

Cleo operated via a freemium model - get people in for free, make the product indispensable, then introduce the premium tier when trust was already there.

By the time the upgrade prompt appeared, the decision was already half made. Nobody had to commit to anything upfront - they just started using it, and the product did the convincing.

Whatever you're selling, find a way to let people experience it before you ask for money. Trust is built through use, not promises.

The finance industry looked at Gen Z - chaotic, impulsive, perpetually skint - and saw a liability. Cleo looked at exactly the same people and saw a market nobody had bothered to serve properly.

No customer is too difficult. No market is too messy. There's just a gap between the problem that exists and the solution that's been built for it so far.

If you're sat on an idea that doesn't fit the traditional mould and need help with the funding side, drop me an email - [email protected]

Till next time,

James