No lack fintech companies claiming to create a more inclusive, mission-driven fintech platform for low-income people. However, obstacles such as required credit history or predatory interest rates and fees limit the access of a whole group of people to our financial systems.
Akshay Krishnayafounder and CEO Line, believes it can engage users in its vision for a more inclusive financial web. His startup is giving people emergency lines of funds—as little as $10 each—without charging interest or requiring proof of credit or income. Over time, as confidence in loan repayment grows, so does the ability of the customer to request larger checks.
To bring the customer’s perspective to financial services, Krishnaya has raised millions of dollars in new funding for his startup. He told TechCrunch that Line has raised $7 million in equity and $18 million in debt, for a total of $25 million in a round led by Massive.
Other investors including TASC Ventures, Goodwater Capital, SustainVC, Avesta Fund, Strada Education Network, The Josephine Collective, Overtime VC, Techstars, and Kelmhurst participated in the round themselves.
With new capital underway, Line’s biggest breakthrough, and the reason it will work through consumer confidence issues with the larger fintech world, Krishnaya believes is a prospect. The entrepreneur, a former Uber driver, had an experience he is now trying to destroy.
“Champions of people who create products? They have never been financially harmed like me or my family,” he said. “Because of this, the solutions that were created were more unworkable, non-inclusive and non-interacting islands.”
Growing up in “extreme poverty,” the entrepreneur detailed the years he couldn’t afford new shoes despite being in middle age, which is why he still suffers from arthritis. He was almost kicked out of the National Debating Championship because he couldn’t find a clean shirt and often had to choose between eating to protect his sugar levels and taking the bus to school.
“People building products today in Silicon Valley or anywhere else haven’t gone through this,” Krishnaya said. Investors often told him that his product, which gave small instant cash checks, could be easily replaced if someone in need simply asked a friend to give it to Venmo, he recalls. “For the same reasons, I couldn’t ask a friend to give me money so I could eat and then take the bus, it was just unreal… and people can’t resonate with that reality because they’ve never been there or done it.” “.
Public Benefit Corporation Line charges a monthly subscription fee starting at $1.97 in exchange for instant cash. After redemption, users can gradually increase checks and trust, which can be used to prove creditworthiness.
The company, which launched last July, has registered 500,000 people in more than 5,200 cities in all 50 states. The company also said registrations were up 100% from the previous month, and as rapport was built, the company expanded the service from instant cash to larger checks.
Today, about 60% of Liniya’s users are women, and the company’s internal team is 40% women; with parity as the ultimate goal.
The startup also claims to be profitable, with revenue growing 300% qoq. This is great news for Line, especially given the large number of fintech startups, but perhaps even more significant for the clients it serves. The company could not be financially viable if early adopters did not pay back their loans, establish trust, and expand their missions. While Line didn’t give details, it did say that most users return their checks within the same month and retake the same cash “line” later; revolving line of emergency funds.
“Once they replenish their line, it is completely available to them, so it has not disappeared, they will have to wait until next month,” he said.
“Instead of finding the least risky clients, we tailor our underwriting and our technology to the client’s risk profile,” he said. The algorithm that decides who gets which fund weighs things like inflation, caregiving responsibilities, and hourly work. Of course, the startup still has issues: how does it test early adopters and what happens when the startup scales and volatility is introduced into payback cycles? Today, technically anyone can use Line, but ultimately the platform needs to be more discriminating so that only those who need it most can request emergency funding?
The founder hopes Line’s growth can signal to the wider fintech industry that there’s a better way for low-income people to build. “And we don’t want to be a neobank, just to be clear,” he added.
Credit: techcrunch.com /