Milo Savings Inc.
Delafield
Innovation: Mobile app that deposits change in savings
www.milosavings.com
About a year ago, Craig Sweeney, a marketing and advertising consultant from Delafield, was brainstorming business ideas with his friend, Tom Wondra, when they got on the topic of college tuition. Specifically, its dramatic increase over the past four decades.
Between 1980 and 2009, the average annual increase in college tuition and associated fees has grown at more than twice the rate of the cost of all consumer items in the United States, according to data from the U.S. Bureau of Labor Statistics.
Sweeney has a son who recently graduated from the University of Wisconsin-Milwaukee and a daughter who is currently enrolled there. He was feeling the financial burden firsthand. Wondra is a business and operations executive who focuses on starting and scaling digital technology-focused companies.
“After discussing a couple of options of new business ideas, we were looking at the issue of alleviating debt for college students,” Sweeney said. “We looked at a couple ways we could tackle that. One way was peer-to-peer lending. So that was an option we looked at early on. And then very quickly though, we pivoted to looking at alleviating financial burden on the front end.
“How do we help people save?”
They came up with the idea of creating an app targeted at middle- and lower-middle-class families, who often struggle to find the disposable income to generate a healthy savings account on their own to pay for things like emergencies, vacations, weddings or their kids’ college tuition. The app would make saving “frictionless,” he said, and integrate itself into its users’ daily lives to spread out contributions over long stretches of time and build savings gradually, a little bit at a time.
Together with two Chicagoans, web designer Justin Seidl and software developer Robert Schwartz, they founded Milo Savings Inc. in Delafield and spent the past year building the app.
The app works by linking users’ checking accounts with a PNC Bank savings account. Every time a user makes a purchase or payment with his or her debit card, the app automatically rounds up the purchase to the next dollar and deposits the difference, anywhere from 1 to 99 cents, into the savings account.
“Unless you start off with your child when they’re 1 or 2 and you’re saving for them, you’re probably not going to pay for their entire college education with Milo,” Sweeney said. “But we can make a dent and we can make an impact. That’s really all we’re trying to do. Whether it’s saving for college, whether it’s saving for a vacation that you’ve never been able to take, saving for braces for your kid, saving for a wedding. Whatever that goal is, we can help you with it. That’s where we’re at.”
The app is currently undergoing a phase of beta testing. Up until this point, Milo’s founders have been bootstrapping the app development, but Sweeney said they’re planning on raising money through a funding round of between $1 million and $2.5 million in the next few months.
“We’re hoping the Wisconsin investment community responds favorably,” he said. “We’ve gotten some good feedback, but it’s yet to be seen. We hope to keep it in Wisconsin from that perspective. Certainly if it doesn’t work out that way, we’ll have to look at alternates, but we’re hoping the investment community in Wisconsin responds well to it. If it doesn’t work we will have to look at other markets, Chicago probably, but we’re hoping to make some headway here from an investor standpoint.”
The app is similar to existing programs, such as Acorns, an app targeted at millennials that rounds up checking purchases and deposits them into investment funds; Mint, a more comprehensive, one-stop-shop financial management app; and Digit, a savings app that tracks users’ spending habits and income to determine what they can afford to save and automatically deposits small amounts, between $5 and $50, into a savings account two to three times each week.
Sweeney said Milo plans to spread its user base by working with school districts for use while teaching students financial literacy, and by incorporating Milo into employer benefit programs by getting employers to match employee contributions on the app up to a certain amount, for example.
The Milo team also is planning to roll out something called the “Milo Marketplace” in the first half of 2017, which will connect customers with local businesses that will match savings contributions on certain purchases.
