There is nothing like results to gain the attention of investors and fintech startup SeedFi accomplished just that in a beta launch of their financial health platform. Following six months of trial, the startup achieved actionable data from thousands of users in underserved communities who successfully increased their savings, achieved a credit score of 600 despite having no credit history or improved their score despite having too few credit accounts.
The founding team drew on their careers at top banks and prior experiences at mission driven startups to envision a platform to benefit lower income individuals. The successful beta trial in combination with a seasoned team resulted in a Series A round led my Andreesen Horowitz, with Flourish, Core Innovation Capital, and Quiet Capital participating. To date the startup has raised $69 million in funding that includes $15 million in equity and $50 million in debt.
Jim McGinley, Co-Founder and CEO of SeedFi and previously COO at fintech Aura, has a pulse on the financial challenges of those in underserved communities. SeedFi’s average customer who earns about $50K per year wracks up $460 in overdraft fees and often relies on payday loans that typically have a 400% APR or higher. Those numbers presented an opportunity to McGinley and his founding team to offer an innovative alternative.
“They barely make enough to cover their expenses and any misstep can set them back for years. Our goal is to address the root cause of the problem and leave our customers better off than we found them, so we’ve structured all of our products to generate savings and build credit. The end goal is to help alleviate that stress and allow people to make progress towards a better future,” says McGinley.
With a pandemic underway and stats such as 69% of Americans having less than $1,000 in savings and 61% projecting to run out of emergency savings by the end of last year, a platform such as SeedFi offers a different narrative that may lead individuals to better financial health.
SeedFi’s first two products are: the Credit Builder Plan that helps individuals build credit and long-term savings and the Borrow & Grow Plan that provides ready access to funds in addition to helping them build savings and credit. The products are intended to end the cycle of debt and provide an economical option to installment and payday loan.
“There’s a massive business opportunity for new financial services entrants to reach historically underserved populations through better product experiences, underwriting and technology,” said Angela Strange, General Partner at Andreessen Horowitz and new Board member of SeedFi. “SeedFi is on a mission to help Americans achieve long-term financial health and has a powerful platform for broader financial inclusivity.”
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