The global COVID-19 pandemic has seen millions of Americans around the country lose their jobs and missed rent payments, thus serving as a striking reminder of the looming financial duress many households are under. On Wednesday, the digital savings app Esusu, which targets immigrant and minority groups, announced the close of a $2.3 million seed round, bringing its total financing to $4 million.
The company’s Co-founders Wemimo Abbey and Samir Goel started seeking additional funds in June and the latest round includes investors like Impact America Fund, Zeal Capital Partners, and Next Play Ventures, the latter of which is led by LinkedIn chairman and former CEO Jeff Weiner.
Esusu which was founded in 2018, is a rotational savings and credit building app that allows users to pool and withdraw money for big-ticket transactions, such as a down-payment on a house or other such related high-ticket expenses. These purchases and the fulfillment of debt obligations are then reported to credit bureaus to help users establish or improve their credit profiles. Esusu also doubles as a rental data reporting service. The company does this by partnering with landlords, property managers, public housing authorities, and consumers to report tenants’ rent payment history, now making it one of the most sizable and consistent payments for Americans.
“We’re trying to address the fact that millions of people have a thin credit score or no credit score at all, while the average debt is around $135,000,” says Abbey who made Forbes 30 Under 30 list in 2019 along side co-founder Goel. “People are seeing the impact of what Esusu can do for their financial identity, which gives them a lot of leverage.”
The co-founders spearheaded the launch of a rent relief fund in April and have so far raised nearly half a million dollars through an initial crowdfunding campaign for the cause. They also later raised some funds from the nonprofit impact investment fund Acumen and The Global Good Fund.
Applicants to this rent relief fund are vetted based on “greatest need.” The loan is structured as an interest-free one that must be paid back within a 12-month duration. “The pandemic’s disproportionately harmful impact on under-served communities has reinforced the importance of closing societal divides and ensuring that equal talent has equal access to opportunity,” says Weiner, founding partner at Next Play Ventures. “Esusu provides a foundational building block in making that a reality.”
Over 5,000 tenants across the United States of America have so far applied for Esusu’s financial assistance and the fund has subsequently deployed about a quarter-million dollars to date. Majority of the applicants (about 85%) are Black, 7% are non-Black people of color and the remaining 6% are Caucasian, which Goel says is telling.
“People have succeeded economically in the U.S. through access to cheap debt, so the essential redress to that problem is helping Black folks get access to good credit so that they can get cheap loans and invest in homes and other products,” Goel says. “Social justice will take a lot of time but we can focus on economic justice and begin to help equalize wealth building.”
One way the Fintech company makes makes money is by charging landlord $2 per unit each month for rent reporting. Esusu also offers a value proposition of 25% uptick in punctual rental payments to landlords. Additionally, the company works with the landlords on amenities which can be used to lure new high-quality tenants or keep existing tenants who want to continue to build their credit.
Less than 1% of rental payments are reported to the major credit bureaus despite constituting the largest single monthly expenditure for American consumers and acting as a strong predictor of an individual’s credit risk.
“Our modus operandi centers on how we can help people achieve their financial best and we fundamentally believe that we can leverage our comprehensive tapestry of data to eliminate the racial wealth gap,” Abbey says.
Esusu currently operates in more than 30 states in the US and covers over 200,000 rental units in cities like New York, Atlanta, Los Angeles, Minneapolis, Houston and Portland. It plans to expand across all 50 states within the next year and projects $1 million in revenue by year-end. With its latest capital infusion, Esusu plans to add new hires to its 25-person team.
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