Money can make people moody. There are levels of privilege, or lack thereof, that can make even the most basic conversation about bills seem unnecessary. Transfer that discomfort to relationships, and it can seem like an awkward—and fragmented—dance about who pays what bill, when (and how).
ivella, a Santa Monica-based startup, wants to create banking products for couples to ease some of those strained relationships. Led by CEO and co-founder Khalil Lalji, the startup is launching with a split account product that just raised $3.5 million in funding from Anthemis, Financial Venture Studio and Soma Capital. Other investors include Y Combinator, DoNotPay CEO Joshua Browder and Gumroad CEO Sahil Lavingia.
Lalji, who helped content creators with digital content before jumping into the fintech world, says the startup was born out of his own frustration with the expectation that couples would just use Venmo if they weren’t married. The best solution so far has been shared accounts: this means that two people create an account where they – sing with me now – join their accounts and receive from the same pool. Instead, Lalji wants to create a split account: couples maintain separate accounts and balances, but receive an Ivella debit card linked to both accounts.
With this shared card, couples can set ratios—for example, prorate a percentage of each bill someone pays based on their income—and Ivella will automatically split any transactions made using an Ivella debit card.
According to Lalji, this in itself was the biggest technical challenge Ivella faced in its early days. He said peer-to-peer platforms still split payments “very rudimentary,” while Ivella wanted to intercept transaction authorization so that people would only be charged for what they set for their ratio. “Do we have some real-time decision-making logic to determine what is the balance of these two user accounts? Can both users support payment ending based on their default split? If so, transfer the money and then send back the confirmation.” The company has created an internal ledger to track how money moves between user accounts, something the co-founder believes many other fintech companies don’t do.
The startup didn’t start like that. He acknowledges that the first version of Ivella looked like a P2P transfer platform with improved UX. The team soon discovered problems: “One of the biggest shortcomings of the previous iteration was that payments and payment networks interacted with only one user account.” For example, if you are trying to make a $100 transaction when you and your partner both have $50, the system will reject the payment because it only sees one account; or, on the other hand, if you only have $100 in your account and your partner has no dollars, the payment will be approved even if your partner doesn’t have enough money to complete their end of the deal.
“The place where a lot of people fail, like a lot of fintech, is that it doesn’t break the mold of what banking looks and feels like,” Lalji said. “And because we’re focused specifically on couples, we want to create a product that’s not as barren and not like in a can.”
Ivella competes not only with the theory of joint accounts promoted by incumbent banks, but also with venture capital startups aiming for a multi-user fintech world.
Braid, another social fintech startup, recently launched Pools as an alternative to consumer payment links. People can create a Braid Pool based on any effort—money for a trip to Italy this summer, total car gas expenses, or a kitten that can be set aside for monthly snacks at a book club—and then send a link to friends who want to contribute cash. then goes directly to the wallet, and the creator can manage it independently or together with the participants. In 2020, the startup raised a $9 million seed round from investors including Index and Accel.
Zeta, which raised a $1.5 million seed round last year.wants to make joint accounts more open and transparent. Many standard joint accounts simply give each user full access to other users’ finances, while Zeta wants to give people a more flexible way to exchange money.
Zeta CEO Aditi Shekar told TechCrunch that she sees the financial sharing strategy as a response to “temporary” thinking.
“We are focused on working with couples who have reached a point in their relationship where they are less focused on breaking up and more focused on sharing. This is a key difference in the state of mind,” she said. “And, from our point of view, also one that has long-term value.”
She added that “we believe that after a couple splits there should still be flexibility regarding the exchange…but the main dynamic is that you are a team working together on your finances.”
Lalji said Ivella will focus on products to support couples at every stage of their relationship, including joint accounts, loan products and joint investment products, long-term. However, Zeta raises a question that Yvelle needs to answer: Is their startup’s core clientele – couples who are on their way to marriage/joint account but not yet married/ready for a joint account – big enough for the venture? The recent rise suggests yes, but given the recent difficulties of fintech as a sector as a whole, Ivella needs to prove that it can lower customer acquisition costs and increase customer stickiness.
Today, Ivella’s main monetization strategy is based on the revenue it generates from interbank fees. Lalji said the points and rewards will be launched as part of a premium subscription that will include some additional features such as the ability to import and separate transactions not made on an Ivella card.
Credit: techcrunch.com /