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Financial Health Start-up SeedFi Launches to Help Underserved Americans Build Credit

SeedFi, the financial health startup helping Americans build credit, save money, access funds, and plan for the future, has launched and announced it has raised $65 million in funding, including $15 million in equity and $50 million in debt. The company’s $15 million Series A 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% of Americans have less than $1,000 in savings and 61% 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% 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 initial best-in-class product offerings. The Credit Builder Plan is the best credit-building product on the market that creates important long-term savings habits. Customers 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 six months. The Borrow & Grow Plan is the first and only digital financial product that 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 instalment 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 $500K 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,” said Angela Strange, General Partner at Andreessen Horowitz. “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.”

“SeedFi’s seasoned founding team, led by Jim McGinley, is uniquely positioned to deliver innovative lending, savings and credit building solutions, developed to help the financially vulnerable,” said Emmalyn Shaw, Managing Partner at Flourish Ventures. “I invested in the team’s vision and in their years of experience developing successful financial service businesses that have meaningfully advanced financial health for Americans. I’m honoured to be part of this journey.”

Author

  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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