Small Business

How One Young Entrepreneur Landed $25 Million to Shake up the World of Personal Finance

By Donna Fenn

Updated on: July 26, 2011 / 6:46 AM EDT / MoneyWatch

Alexa von Tobel, the 27-year-old founder and CEO of LearnVest, recently landed $19 million in series B venture capital to grow her award-winning personal finance website for women. von Tobel started LearnVest to address what she felt was a huge gap in the marketplace: there was simply no place for young women to get solid information and advice about managing their money. Financial planners are interested largely in high net worth individuals, and print guides are out of date as soon as they're published. And so she built the kind of resource she wanted for herself, starting with an email newsletter and quickly adding content that included free "bootcamp" courses on topics like budgeting and cost-cutting. Today, LearnVest is launching a new suite of tools that includes free products like My Money Center, where members can link all their accounts, as well an Advice Center, which offers access to financial planners for as little as $4.99. I caught up with von Tobel at LearnVest's Manhattan offices last week, and we chatted about her entrepreneurial journey and her uncanny ability to raise money.
Donna Fenn: What inspired you to start LearnVest?

Alexa von Tobel: I graduated from Harvard College and I was going to work on Wall Street with Morgan Stanley. And I thought how is it possible I never learned a day in my life anything about financial planning or personal finance? I didn't know how to open a credit card account and I didn't know what a credit score is. I thought there really should be something online for me, something easy and accessible because money is daunting. I went back to business school in the fall of 2008 and I won a business plan competition sponsored by Astia. It was a plan for LearnVest. Ultimately, after winning this business plan competition, I decided I needed to go do this. I ended up dropping out of Harvard business school --- I took a forman leave of absence -- in the heart of the recession. My family thought I was crazy pants.

DF: Why target women specifically?

AvT: We make six to ten financial decisions a day and all of us need to understand money, but we decided to focus on women for a few reasons. We're all women on our team, so we focus on what we know. Most women are the chief household officer; they make 80% of the spending decisions in America. And there are some major trends happening with women that make it so powerful for us to be a brand that speaks to them: women are getting married later; divorce is an all-time high; women are outliving men 6.2 years on average; 25% of moms in America are single moms. So we said, why don't we be a brand that women can come to and know they're going to get direct service.

DF: How did you fund the company initially?

AvT: Blood sweat and tears. In January 2009 it was the heart of the recession. Madoff had taken advantage of people and everyone had very little trust, so people were not free-flowing money out. But I had a full 70-page business plan and I knew exactly what we were building and I personally was 100% committed. I put my own savings into the company. I think what happened is we got some major people behind us. I knew I was going to start with an e-mail newsletter because it was the easiest thing to start, so I got the best in woman e-mail newsletters -- Catherine Levene, the former COO of Daily Candy. And I knew we were going to be creating a lot of content so I got Betsy Morgan who is the former CEO of Huffington Post, who grew them from a little site to a huge site. And then I went out and got the biggest hitters in money. Ann Kaplan was one of the first woman partners at Goldman Sachs. She was the original big seed investor and she's actually on our board. I'd never met any of them before, so it's not like they were friends and family, but I went and found them and got them to believe in what we were building.

It took a lot of meetings and a lot of persistence. But after the first meeting they saw that I was going to run through any wall that I had to. And I'm not someone who gives up on things. And I don't take no for an answer. I think they got that I really believed in this and it was going to happen. And the second that they joined, then everyone else did. We raised 1.5 million.

DF: You could have raised more money. Why didn't you?

AvT: You only take as much money as you need because it provides you with really good discipline. Especially since I stared this with my own savings, I spend every dollar like it's my dollar. We make smarter decisions that way.

DF: You launched at the company at TechCrunch50 in September of 2009 and landed another $4.5 million from Accel Partners in the spring of 2010. What made LearnVest so attractive to venture capitalists?

AvT: There was nothing in this space. There are tools out there to help you find love on line, lose weight on line, study for the GMAT on line. There's nothing to help you learn about money. We really are the only major player in the space that's doing this. [In the beginning of 2010], we had over 10,000 users who had changed behavior through our boot camp program. Engagement was so high. We were a little brand and women were trusting us with their financial questions. And we were sitting there knowing we had struck a chord.

We started looking for money in February of 2010, and we got it at end of March, so it took less than six weeks. I think that's pretty remarkable because it wasn't a boom time. We decided to take money form Accel because I truly believe they're the best venture firm in the world right now. They did Facebook, they did Groupon, they did Kayak, they did Etsy. And they know how to build companies from the ground up.

DF: You just landed another $19 million from Accel. What are you planning to do with it?

AvT: We're gunning to be the leading brand for women and their money. Right now we have just under 200,000 members and we're adding 30,000 a month. We'll have 400,000 members by the end of this year. We're going to spend it on the right people to build the right products for them. We talk to our users all the time. We've created LearnVest Labs -- over 5000 incredibly passionate users who talk to us. We send them surveys asking, how do like this product? How do you want it delivered? How much would you pay for it? We talk to three to eight users every day. Based on those discussions, what we're unveiling today is really changing the shape of how you can get help with money.

For a free look at LearnVest's new paid features, use the promo code bnet2011, good for a 36-hour pass until Aug. 2.