Growing up, Dennis Cail didn’t have a bank in his neighborhood of Monroe, Louisiana. He watched payday lenders charge his father and uncle, both employed at the local paper mill, a 30% fee to cash their checks, as well as exorbitant interest rates if they needed to borrow money. So, after a career in M&A advisory, Cail decided to try to fix these all-too-common issues and help people pay their bills.
In 2018, he launched Dallas-based Zirtue, a fintech platform that helps people lend money to family or friends at 0% interest for terms of less than a year, or 5% for longer term loans. Loans between individuals, which represent an estimate $184 billion per year, can be applied to any expense. Thus, Zirtue structures loan agreements between friends and family members and automates the repayment process, making it easier for its retail customers to pay their bills and for its business customers to collect payments. When you arrange to borrow money from a family member to pay your heating bill, for example, Zirtue’s new service sends the funds directly to the utility company. The app “helps keep the lights on, the car running,” Cail says. Starting in February, customers who use Zirtue to borrow money to cover a bill will also have access to a bank account and a debit card.
Cail is part of a wave of black entrepreneurs trying to close the racial wealth gap and create more equitable access to financial services. According to the Federal Reserve, in 2019, the typical white family in the United States had eight times the wealth of the typical black family. “Less Wealth Means Black Americans Are Underrepresented in Financial Products and Services,” Says a 2020 report from McKinsey. Here are four other black founders who aim to solve this problem.
1. Kelly Ifill, Guava
Guava, based in Brooklyn, New York, helps black-owned businesses establish banks and build community, and plans to offer assistance in accessing low-barrier loans. Founder and CEO Kelly Ifill grew up in a family of immigrants and entrepreneurs in Brooklyn’s Brownsville neighborhood. She had a job in venture capital, but quit to start Guava when she saw how badly the pandemic was hitting black-owned businesses. (Guava wasn’t her first startup — she previously co-founded a venture capital firm, Seneca Network, to help various founders raise capital.)
“I try to make changes in the people I love and care deeply about,” she says. “And that’s hard.” She tackled a huge problem: lack of access to capital black business owners startup has $500 of outside equity at inception, compared to $18,500 for a typical white-owned business, according to the National Bureau of Economic Research. Guava has raised $500,000 to date and in mid-January completed an invite-only launch. Ifill hopes to have a few thousand users by the end of the year and be able to lend to small businesses on the platform by early 2023.
2. Craig J. Lewis, Gig Walage
Gig Wage makes it easier for companies to get cash for on-demand workers, with instant payout options and easy integration into company software. “Our vision is to be a financial infrastructure for the gig economy,” says Founder and CEO Craig J. Lewis, noting that Black and Hispanic Americans are more likely than white people to do concert work. A former head of payroll technology, Lewis founded the Dallas-based company in 2014. The hardest part, he says, was securing funding.
The firm now has nearly 300 corporate clients and has raised more than $15 million in capital, but things only started to shake up when Lewis switched from traditional venture capital firms to venture capital firms. Austin-based Green Dot, which provides financial products to low- and middle-income families among other things, led Gig Wage’s Series A. It was a good fit. Lewis grew up with these products. His father was an entrepreneur, so he intimately understood the importance of getting paid quickly when it comes to building Gig Wage. “I’ve been through that,” he says. This is who I am.”
3. Wole Coaxum, Mobility Capital Finance (MoCaFi)
Wole Coaxum, a former JP Morgan executive, founded Mobility Capital Finance (MoCaFi) in New York in 2015 to help provide access to banking services to underserved communities, in addition to other financial services. He was motivated by protests against the murder of Michael Brown in Ferguson, Missouri. “You have to have, in my mind, an economic justice plan that goes hand in hand with a social justice plan,” Coaxum said. Eventually he realized that it’s one thing to create a service to help people get banked – almost half of black households are unbanked or underbanked, according to McKinsey— but persuading people to use it is another matter altogether.
Things changed in 2020 when the Bedford-Stuyvesant Restoration Corporation, a local community development nonprofit, contacted MoCaFi for help distributing payments to hard-to-reach residents. In response, the company created new partnerships to reach customers, first with the city of Honolulu to distribute Covid relief funds, then with Los Angeles, Birmingham, Alabama and New Orleans. When people start using MoCaFi to receive payments from government programs – no social security number required – they can also open a bank account and access the platform’s other products, including rent reports to credit bureaus to improve their credit scores, cash back rewards for purchases from local Black-owned businesses, and private coaching and documentation support for buying a home.
4. Ashley M. Fox, Empify
According to Ashley M. Fox, CEO of Empify, a Philadelphia-based financial education technology company, there’s plenty of information out there on how to build wealth through Google, but it’s not enough for many people. “This is about someone saying you can do it, we can do it, and I’ll be right here with you,” said Fox, who before founding the company was an analyst at JP Morgan and a financial adviser. Empify–the name is a portmanteau of empower and to modify— earned its first contract in 2017, with the Philadelphia School District, to teach wealth building skills. It has now partnered with over 75 school districts, businesses and other organizations.
Empify courses typically focus on topics such as brokerages and annuities, and help people develop a mindset that promotes wealth building, Fox says. “It’s really about changing the way you view money in America,” she says. “My students think being rich in America means being a white guy in a trench coat.” The company has also developed an app and courses for adults, and aims to integrate its courses in school systems around the world into common core curricula.
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