SeedFi, a financial health startup designed to help Americans build credit, save money, access funds, and plan for the future, launched today and announced it has raised $15 million in Series A funding and $50 million in debt.
The $15M round was led by Andreessen Horowitz, with participation from Flourish, Core Innovation Capital, and Quiet Capital. Andreessen Horowitz general partner Angela Strange will join the SeedFi board of directors and Flourish Ventures managing partner Emmalyn Shaw will join as a board observer. The company has raised a total of $69 million in funding and will use the new capital to build out its product suite and grow its customer base.
SeedFi’s mission is to provide a new generation of financial products to underserved Americans to accelerate their economic progress. The founding team has years of experience at both mission-driven startups and the world’s largest banks, plus firsthand knowledge of common money pain points. In an economy where 69 per cent of Americans have less than $1,000 in savings and 61 per cent of Americans ran out of emergency savings by the end of last year, SeedFi is forging new paths toward financial success.
“We’ve seen firsthand how the system has been designed for underprivileged Americans to fail,” said Jim McGinley, co-founder, and CEO of SeedFi. “Our average customer earns $50K a year, yet they pay $460 a year in overdraft fees and payday loan companies charge them APRs of 400 per cent or more. 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.”
The company is launching with two products. The Credit Builder Plan allows customers to save as little as $10 from every paycheck, which is reported to the credit bureaus to build their credit history, and generate $500 in savings in as little as 6 months. The Borrow & Grow Plan provides immediate access to funds while also helping customers build savings and credit. It was designed to help end the cycle of debt experienced by many underprivileged Americans and is a more affordable option than the high-priced installment or payday loans that these consumers often end up turning to.
SeedFi launched in private beta in 2019 to test its products among thousands of Americans and helped its initial customers build more than $500,000 in savings through the current pandemic. After six months of on-time payments, SeedFi customers with no credit history were able to establish a credit score of 600, while customers with existing credit scores and less than three credit accounts increased their scores by 45 points.
“There’s a massive business opportunity for new financial services entrants to reach historically underserved populations through better product experiences, underwriting and technology,” Ms. Strange said. “SeedFi is on a mission to help Americans achieve long-term financial health and has a powerful platform for broader financial inclusivity. I’m thrilled to join their board and support them on this journey.”
