We are incredibly excited to formally announce our latest investment in EQL Finance, a Washington DC area based fintech company that is disrupting the payday lending industry and putting the power back in the hands of under-resourced consumers. We are proud to be leading this seed financing round and I will be joining the Board of Directors. EQL is a perfect example of our Inclusive Investing Strategy™ at work.
We first met Eddie, Paul and Stefan through our friends at the Techstars Equitech accelerator program that’s based in Baltimore, MD. From our very first conversation, it was apparent that this team was well positioned to scale this business model. Aside from embodying the dynamic, thoughtful, honest, direct and “Zealous” characteristics we look for in our founders, they also possess complementary skill sets that add significant value to the business. Eddie de Guia (Co-founder & CEO) started his career at Google in the early 2000’s and later founding multiple ad tech companies that he profitably exited. Paul Pierre (Co-founder & CTO) has 15+ years of experience as a senior UI/UX designer, founding and profitably exiting multiple gaming businesses. Stefan Wille, (Co-founder & CFO) has 15+ years of experience in fintech (Revolut & N26) and traditional financial services (Credit Suisse & Houlihan Lokey). We could not be more excited about the founding team and new hires that have made since.
As a team, we have spent a great deal of time looking at the “emergency loan” space, the competitive landscape that currently exists, and what it could look like in the future. The one piece to the puzzle that we believe is missing from the market today is taking a holistic view of the consumer and empowering these individuals at every step of their financial journey. How do you break the cycle of indebtedness? We believe the answer is properly incentivized financial literacy content, data-centric behavioral nudges, accessible cost savings and the potential for earnings growth. This is exactly what the team at EQL Finance is working on delivering to un/underbanked communities. The company starts with interest free small dollar loans (without a hard credit pull) that are payable over 36 months, where on-time payments are positively reported to credit bureaus. This allows for meaningful improvement to consumer credit scores and enables access to other financial tools in the future. The team then offers behavioral nudges to gamify embedded financial literacy content, offering strong consumer benefits like 1 month payment reprieve as “prizes”. They then help consumers save money by offering targeted couponing for everyday purchases. Lastly, they plan to offer digital bank accounts for un/underbanked consumers so they can avoid predatory check cashing stations. We can’t just offer consumers debt products without educating and incentivizing them to use it beneficial rather than irresponsibly.
The challenge of providing broader and more equitable access to consumer loans has been a long standing problem that has only intensified with stubbornly high inflation and an impending economic downturn. By leveraging alternative underwriting data and a multi-stream revenue model, EQL is able to reliably offer zero interest loans to its customers while driving profitable unit economics and positive social outcomes. We could not be more excited to back these amazing founders and join them on their mission to drive more equitable access to capital for our most vulnerable populations.