Flourish managing partner Emmalyn Shaw joined Peter Renton on the Lend Academy Podcast by Lendit Fintech News to discuss the problems that the majority of the U.S. faces when it comes to financial health, and how the “new breed’ of entrepreneurs are working to change these problems with fintech innovations.
Read some of the highlights of her discussion on the podcast below, and listen to the full episode here.
On Flourish’s spinoff from Omidyar Network:
“Omidyar is known and they proved this model of impact investing and was really focused on a dual checkbook of providing for-profit businesses with equity dollars as well as nonprofit through grants. I think the distinction that we were trying to provide for Flourish is to still use a portion of both equity as well as grants towards this mission, but much more specific to financial services.
So in this case, where 85% of our equity dollars go towards for-profit companies and 15% go towards really ecosystem investing around supporting everything from entities like CFSI who provide real rich research against the health of the financial consumer today as well as partnering with folks in creating regulatory sandbox technology in order for us to really understand how technology can change and actually improve regulatory decisions. So I think this breakdown of 85/15 is different than I would characterize the traditional Omidyar Network use of for-profit/non-profit capital.”
On challenger bank, Chime:
We’ve really thought about how do we invest in technology that either allows folks to earn more income in order to change that dynamic to either spend differently, manage expenses, access credit differently and improve savings and I think along those lines there have been a number of companies that embody that mission. The first of which would be Chime, you know, as a challenger bank, one of the most successful to date and certainly the largest in the US. They’ve really provided what we characterize as a win-win for consumers in that they are leveraging the rails, they are a digital only bank, there are no fees for the consumer, they’re aligned in terms of as a consumer spends and engages with their direct deposit account Chime also is able to generate revenue so they’re very aligned in terms of the fees and how they make money and I believe that that has been instrumental in terms of the trust that they have engendered and the growth rate that they have experienced. They’ve also as a result of their offering, been able to realize and motivate some actual savings and be able to measure that savings and to us that’s a real embodiment of a very commercial business from a financial services perspective that also creates massive impact and is able to address a market that honestly typically does not have very rich financial services, right the [inaudible] market. Many of whom don’t have a high enough income stream to justify being part of a large bank and if they did, they’re often…the fees are so difficult for them, principally around overdraft fees and the like. They’re not able to really take advantage of a full financial banking solution so this has really been transformative on a number of fronts.”
On how Steady is driving financial health in an untapped market:
“Steady is another one that we’re very excited about. They really are providing what we characterize as the income generation side of the house. They are providing a marketplace for the hourly worker, whether it be gig or otherwise, and to provide a portfolio of work. I think in a world of 1099 where that market is only growing substantially, it’s a real opportunity for folks to choose among the best type of job opportunity for this consumer, and ultimately over time provides necessary upscaling to allow them to actually generate more hourly work at a higher pay than they would otherwise have. So there’s been a real obvious ROI in a short period of time that they’ve been able to identify some true savings. Again, we’re very in the early stages of managing the closed loop of incremental earnings, but in this very early stage have already been able to see folks earn upwards of a $167 and then some within a month of joining Steady and getting on that platform and we’re still in the very early stages of really increasing that revenue opportunity over time so very excited about what we’re seeing there.”
On Propel providing technology services for food stamp recipients:
“The last [portfolio company mentioned] which is also an interesting example of a very commercial opportunity, but really impactful is really around on the technology innovation with a company called Propel that’s actually providing technology services and ultimately, financial services for the food stamp recipient.
In that case, again, really meeting a consumer where their greatest need is, it’s providing a very easy way for them to check their food stamp levels and then ultimately to be able to find ways to save, manage how they’re using that food stamp distribution and then ultimately provide very rich financial services on the backend, very similar to kind of Green Dot-esque that we’re familiar with in other markets. I think what we’re seeing there is, again, across all three of these companies, because the need is so important, the customer acquisition costs are actually quite impressive and really afford for powerful unit economics and ultimately scale for the business.”
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