YC-Backed TrustEgg Launches, Lets Anyone Create Trust Accounts For Their Kids
TrustEgg , a Y Combinator-backed startup which lets parents set up trusts for their children is actually launching. That's a milestone in and of itself, because, as a financial services company, it had been facing a lot of regulatory hurdles. The company has also recovered from the loss of its first co-founder, Gabe Krambs, who left CEO Jeff Brice to take a job that paid the bills. It has since added John Zdanowski , co-founder, CFO, and investor to the team, and has relocated operations to San Diego.
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TrustEgg, a Y Combinator-backed startup which lets parents set up trusts for their children is actually launching. That’s a milestone in and of itself, because, as a financial services company, it had been facing a lot of regulatory hurdles. The company has also recovered from the loss of its first co-founder, Gabe Krambs, who left CEO Jeff Brice to take a job that paid the bills. It has since added John Zdanowski, co-founder, CFO, and investor to the team, and has relocated operations to San Diego.

And that’s not the only big change as TrustEgg goes to launch, says Brice, who admitted that the company was basically at a “regulatory standstill” in August.

“In the beginning, we were trying to become our own chartered trust company. Right now, we’re existing as a licensed product to an existing trust company,” he explains. (That company is Summit Trust.) The benefit to this new situation is that the startup can launch without raising additional funding, as it was planning to do earlier. And it doesn’t take away the opportunity to eventually become its own chartered trust company in the future, Brice adds.

He credits much of the work in getting from beta to public launch to Zdanowski, who’s not with TrustEgg day-to-day, due to other obligations. (He’s also a co-founder at AppStack, for example). But Zdanowski has helped with some of the more critical parts here, and even put in $50,000 of his own money to help move things forward.  TrustEgg is now in the process of raising additional funding, we’re told.

The company, for those unfamiliar, wants to make it easier for parents to establish trusts for their kids – and it’s targeting a user base who may have never before considered such a thing an option. Trusts are often associated with the more affluent, while the middle class tends to use things like savings accounts when they want to save up for their child’s future over time.

TrustEgg aims to simplify the process, by creating an online home to the child’s trust which can be created in around a minute. Parents are then prompted to invite family or friends who can donate into the account whenever they choose, such as on special occasions like birthdays or holidays.

In tests, I found the sign-up process quick as advertised, provided you have your child’s SSN and your driver’s license handy. However, you have to invite family using an invite system built into TrustEgg which can’t access your address book, making the process of hunting down everyone’s email a bit cumbersome. To donate to another child’s account, you also have to know the account holder’s email address, as opposed to being able to search by name. That keeps the system private, of course. But email addresses, like phone numbers, are things we have saved in email programs, not in our brains. Locating everyone’s email, as it turned out, was the most time-consuming part to getting started with this service.

Also new as the service goes to launch is the ability for those donating to leave messages to accompany their gift. “When the child turns eighteen, they have this almost Twitter-like feed of their life,” Brice says. “When we turn the trust over to them, we’ll also turn this journal of messages over to them.” Growing up, the child wouldn’t have access to this feed unless the parent specifically logs in and shows it to them,  which could make for a sentimental journey, if the child doesn’t see the messages until they’re 18.

There’s no cost to sign up for an account, and the cost per year is 89 basis points for the assets under management. That price includes the management fee paid to Vanguard, the source for the mid-risk, mid-range funds with no minimum requirements which TrustEgg uses.

A couple of other new additions since last summer, include new hire Kinda Hatamle, who will lead marketing for TrustEgg. Previously, she ran customer acquisition marketing at Mint.com, so she’s familiar with this market. The company is also working with the 1:1 Fund, a program that helps lower-income families save for their children’s future. As the Executive Director of 1:1 Fund at CFED Carl Rist explains, the fund currently supports 8,500 savers in the San Francisco Bay area and two Mississippi communities.

“TrustEgg’s innovative online trust platform will provide the 1:1 Fund with a simple, nationwide account to offer savers as the 1:1 Fund expands into additional communities,” Rist says. “Once accepted into a local CSA [children's savings account] program, parents would register on the co-branded TrustEgg platform and set up accounts for each of their children.”

Although the 1:1 Fund isn’t really an “enterprise” customer because it’s charitable, it demonstrates the platform’s ability to reach a larger type of customer than an individual family. “We can take the infrastructure we’re building as a company and use it for something really worthwhile,” says Brice of 1:1 Fund’s adoption. He adds that later on, the company would consider selling TrustEgg as a white-labeled products to banks, who could then resell it to their own customers.

Prior to now, TrustEgg has only been going through limited, private friends and family testing. Today will be the first time it has opened up to the wider public. Interested users can sign up here.


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