From lenders targeting lower-income customers to a hotel reservation app that has branched into credit cards, eight personal finance companies made this year’s Fintech 50.
C
onsumer-facing startups have been among the hardest hit as the fintech industry has gone through the upheavals of shrinking market values and desperate moves, including deep layoffs, designed to preserve capital. Still, some have proven resilient and have continued to innovate–and to fulfill fintech’s promise of bringing financial services to those who are underserved by legacy banks and lenders. Of the eight personal finance companies that made the cut on this year’s Fintech 50 list, more than half might be fairly described as fulfilling that mission.
The most obvious example is Santa Monica-based Tala, which won a spot on our honor roll for the seventh straight year. It makes loans of $10 to $500 to customers with little formal borrowing history in the Philippines, Mexico, Kenya and India. Today it lends about $85 million a month and reports it has three million active users of its new app, rolled out last year, that offers bill payment and a savings account as well as a loan tracker.
Also returning to the list are Esusu, a service that helps renters build the credit histories many of them lack, and Propel, whose app enables low-income families to manage their government benefits alongside their earned income and overall finances.
A newcomer to the list can also make a less direct pitch for advancing financial inclusion. In October 2022, Snapcommerce, a San Francisco-based discount hotel reservation startup, changed its name to Super.com and began offering the SuperCash credit card–even to those who might not necessarily qualify for a normal credit card. It’s a secured card, meaning users must put up a deposit that covers all their card charges, but it offers cash back rewards and reports payments to the credit bureaus to build up cardholders’ credit scores. So far, 50,000 of Super.com’s travel customers have signed up for the card,
Chime, the largest digital bank in America, which makes our list for the fifth straight time, has also struck a chord with lower- and middle-income Americans seeking an alternative to traditional banks, based on its no fee/no minimum account. In addition, those who have their paychecks direct-deposited in Chime, can overdraft their accounts for up to $200, without being charged fees.
While its 2021 valuation of $25 billion (which makes it the second most valuable private U.S. fintech, after Stripe) likely wouldn’t hold up if it tried to raise money today, Chime is still sitting on plenty of cash, and the company continued to grow last year, with revenue exceeding $1 billion, according to a person familiar with its finances.
The second most valuable personal finance fintech on our list is Upgrade, a six-year-old company valued at $6.3 billion in its last fundraising round in November 2021. It offers personal loans, a checking account and a credit card with cash-back rewards that also functions like a personal loan: you can get a credit line ranging from $500 to $25,000, have a fixed deadline to pay it off and can make payments in equal monthly installments. Founded by Renaud Laplanche–the former CEO of online lender LendingClub who was ousted after running the company for 10 years–Upgrade produced striking financial results in 2022, bringing in $680 million in revenue and $80 million in net profit, Laplanche says.
Here are the eight personal finance companies that made the Fintech 50 in 2023:
Chime
The largest digital bank in America, Chime gained a following by offering free checking accounts and no overdraft fees. It lets customers overdraw their accounts by up to $200 for free and offers a secured credit card (a plus for those with limited or poor credit histories). In 2022, it brought in roughly $1 billion in revenue, according to a person familiar with its operations. It also reportedly tried to buy earned-wage access provider DailyPay for up to $2 billion in Chime stock, though DailyPay declined its offer.
Headquarters: San Francisco, California.
Funding: $2.3 billion from Sequoia Capital, DST Global, Menlo Ventures and others.
Latest valuation: $25 billion.
Bona fides: 13.8 million app downloads in 2022 compared with 13.2 million in 2021, according to Apptopia.
Cofounders: CEO Chris Britt, 50, who did previous stints at Green Dot and Visa; CTO Ryan King, 46.
Esusu
Helps renters build their credit for free by reporting on-time rent payments to credit bureaus. Property owners pay $2 per unit, per month for this service because it increases on-time payments, encourages renters to stay in units longer and looks good on property managers’ ESG reports. In 2022, Esusu added 1,500 properties and grew its customer base to 213 property managers, lenders and other financial institutions, up from 113 the year prior. A recent study with Freddie Mac showed Esusu has helped 27,000 people establish credit scores.
Headquarters: New York, New York.
Funding: $145 million from SoftBank, Motley Fool Ventures, Acumen Fund and others.
Latest valuation: $1 billion.
Bona fides: Four million rental units can use Esusu through their property managers, and more than one million renters have enrolled in Esusu.
Cofounders: Wemimo Abbey, 31, a Nigerian immigrant; Samir Goel, 29. Both had nonprofit experience before starting Esusu.
Greenlight
Subscription-based app, starting at $4.99 per month per family, offers automatic allowances, chore tracking, budgeting, and debit cards for kids—all overseen by parents. JPMorgan Chase uses Greenlight’s white-label technology to power its own teen debit card offering. The startup also has struck partnerships with Morgan Stanley and Amazon to offer debit cards to families. In January 2023, it launched a financial literacy game for kids.
Headquarters: Atlanta, Georgia.
Funding: $556 million from Andreessen Horowitz, JPMorgan Chase, TTV Capital and others.
Latest valuation: $2.3 billion.
Bona fides: 5.5 million registered users (each family that subscribes has multiple users) at the end of 2022, up from 4.5 million the year prior.
Cofounders: CEO Tim Sheehan, 53, a former executive at payments giant Fiserv; president Johnson Cook, 43.
Propel
Its Providers app enables low-income families receiving government benefits such as SNAP (food stamps), rental assistance and TANF (cash payments) to manage those benefits alongside their earned income and overall finances. Propel also issues a free debit Mastercard for users’ cash benefits and earnings (food stamps have their own government card), generating revenue from card interchange fees and from marketers who pay to promote affordable products, such as low-cost Wi-Fi and groceries, on the platform. In December 2022, it launched a feature to let app users digitally file their taxes for free.
Headquarters: Brooklyn, New York.
Funding: $90 million from Andreessen Horowitz, Kleiner Perkins, Nyca Partners and others.
Latest valuation: $500 million.
Bona fides: More than 5 million families use the app monthly; grew 2022 revenue to $34 million, up from $24 million in 2021.
Cofounders: CEO Jimmy Chen, 35, left a product manager position at Facebook to start Propel; COO Jeff Kaiser, 33; CTO Ram Mehta, 37.
Stride Funding
Student loan startup offering income-share loans (payments based on borrowers’ post-graduation salary); deferred tuition loans (six large repayments made after graduation); and more traditional private student loans. It markets itself to schools, who then offer Stride as a financing option when students go to pay their tuition. So far, about 200 schools have signed up, ranging from coding bootcamps like General Assembly and Hackbright to traditional institutions like the University of Colorado, Stanford Law School and the New England College of Optometry. Stride charges a management fee to schools and servicing fees to investors who fund its loans.
Headquarters: Boston, Massachusetts.
Funding: $20 million from Slow Ventures, GSV Ventures, Firework Ventures and others.
Latest valuation: $60 million.
Bona fides: Had 7,600 borrowers at the end of 2022, up from 1,000 the year prior.
Founder: CEO Tess Michaels, 29, a former investment banker whose immigrant father had trouble getting access to student loans.
Super.com
Launched in 2016 as Snapcommerce, a discount hotel reservation service. In October 2022, it changed its name to Super.com and branched into financial services with SuperCash, a secured credit card that offers cash-back rewards and reports payments to credit bureaus. When Super.com’s millions of users book a reservation, they’re prompted to sign up for SuperCash.
Headquarters: San Francisco, California.
Funding: $101 million from Innovia Capital, Lightbank, Telstra Ventures and others.
Latest valuation: Nearly $1 billion.
Bona fides: Super.com has five million active users, and in the seven months after launching SuperCash in October 2022, it issued more than 50,000 cards.
Cofounders: CEO Hussein Fazal, 41, who previously cofounded and sold ad tech company AdParlor; Henry Shi, 30, a former software engineer at Google.
Tala
Makes loans of $10 to $500 to customers with little or no formal borrowing history in the Philippines, Mexico, Kenya and India, using their smart phone data to judge risk. In November 2022, Tala released a digital wallet app giving users access to their loan information and a savings account, as well the ability to pay bills.
Headquarters: Santa Monica, California.
Funding: $350 million from IVP, Revolution, Data Collective VC and others.
Latest valuation: $800 million.
Bona fides: Lends $85 million a month to customers, up from $70 million a year ago; reached three million monthly active users in April 2023, up from 1.5 million the year prior.
Founder and CEO: Shivani Siroya, 41, who founded Tala after studying the impact of microcredit in sub-Saharan and West African countries for the U.N.
Upgrade
The six-year-old fintech offers personal loans, a checking account and a credit card (paying 1.5% to 3% cash back) that also functions like a personal loan: you can get a credit line ranging from $500 to $25,000, have a fixed deadline to pay it off and can make payments in equal monthly installments. In 2022, Upgrade launched a new card that lets customers toggle between paying for items as a debit or a credit purchase and to set rules–such as smaller purchases should always be processed as debit transactions. At the end of 2022, it had 2.2 million customers, up from 1.25 million at the end of 2021.
Headquarters: San Francisco, California.
Funding: $587 million from Coatue, DST, Union Square Ventures and others.
Latest valuation: $6.3 billion.
Bona fides: In 2022, it had $680 million in revenue and $80 million in net profit. The year prior, revenue was $410 million.
Cofounders: CEO Renaud Laplanche, 52, founder and former CEO of online lender LendingClub; CFO Jeff Bogan, 43; head of investor group Adelina Grozdanova, 39; head of cards and loans Matt Wierman, 51; chief information officer Visar Nimani, 48.
MORE FROM FORBES
Read the full article here