New York-based Layup, a challenger bank offering prize-linked savings accounts for sports fans, has raised $2.3 million in a seed round led by Chicago’s Continental Investment Partners. Chicago Ventures and New York’s Entrepreneurs Roundtable Accelerator joined the round for the bank bringing a practice long entrenched in the United Kingdom and Ireland.
Founded by the Irish duo of Owen Monagan and Oisin Tiernan, Layup targets sports fans with raffles, offering varied rewards for account holders. Essentially, the bank distributes some interest payment or marketing dollars as prizes based on chance.
Tapping Sporting Culture
“It’s time for sports to put money back into fans’ pockets, and our no-lose games do just that,” said Monagan, who serves as Layup’s CEO. “Layup’s focus on fun and excitement is our hook to get sports fans off sportsbooks and into saving. Responsibility is our mission, but competing for attention is how we get there,” added the Irishman, who worked briefly at the dating app Hinge.
“Owen and I grew up in Ireland, where we were exposed to a culture that understands the benefits of PLSA and the negatives of sports betting,” said Tiernan, Layup’s chief technology officer, referring to prize-linked savings accounts.
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Layup’s approach has been enabled in the United States by a 2014 American Savings Promotion Act. The startup justifies its gamification of savings, saying there is statistical proof that variable rate of returns on bank accounts save money for low- to middle-income earners. The practice is also claimed to additionally cut account holders’ spending on lotteries. Unlike fantasy games and betting, the PLSAs don’t require much commitment and don’t risk account holders’ money, points out Tiernan.
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“Continental has established a fine track record backing founders using innovation to accelerate financial empowerment and literacy for consumers,” said Paul Purcell, a partner at Continental Investment Partners. Morgan and Tiernan tasted some success with FPL-Plugin, a fantasy app based on Europe’s premier league soccer. It racked up over 20,000 users.
“We could not be more excited to partner with Owen and Oisin as they use their talent and market understanding to promote the dual social benefit of reduced gambling losses as well as increased consumer savings and financial sustainability,” said Purcell.