The terms “tech entrepreneur” and “low-income” typically don’t go together, but an innovative collaboration of philanthropists and investors is trying to change that. On June 24, 2014, the SF Fed’s Community Development Department hosted the Village Capital Venture Forum, part of the SOURCE (Solutions from Our Country’s Entrepreneurs) Initiative, a new collaboration between The Hitachi Foundation, Village Capital and Investors’ Circle. SOURCE connects socially-minded entrepreneurs with investment capital, mentoring, and support. The Venture Forum was the capstone event to Village Capital’s three-month entrepreneur accelerator program, in partnership with the eBay Foundation.
At the Forum, 14 entrepreneurial ventures presented their business solutions for expanding access to financial services for low-income Americans to a group of angel investors, venture capitalists, potential partners, customers, and community members. The ventures represented the cutting edge of financial services innovation, ranging from crowdfunding and peer-to-peer lending to new tools for saving and debt management. In a unique model, the 14 enterprises ranked each other based on their business plans and the two ventures that scored highest, eMoneyPool and WiseBanyan, were each awarded $50,000 in investment capital. eMoneyPool creates a path for individuals to access traditional mainstream lenders by leveraging alternative credit and payment histories. WiseBanyan is the world’s first free online financial advisor that provides access to high-quality investment expertise to individuals of all income levels.
As the financial services landscape continues to evolve at breakneck speed, it’s vital that these innovations include solutions that work for lower-income Americans, an estimated 68 million whom are unbanked or underbanked. While it’s still important to encourage traditional account relationships at brick and mortar financial institutions, the growth of mobile technology and social networks is creating countless new ways to engage low-income individuals with wealth- and credit-building opportunities. Tech entrepreneurs thus have an important role to play in financial inclusion and new collaboratives that bring investors to the table, such as SOURCE, are critical for the development of these enterprises. The community development field can and should pursue new cross-sector partnerships with tech entrepreneurs and impact investors interested in improving the lives of lower-income Americans.
- The 12 other ventures that participated in the Village Capital program are:
- AlumVest connects leading startups from U.S. universities with equity crowdfunding
- Bashar & Fadia’s allows individuals to access affordable financing and repay based on future income, providing investors an opportunity to invest in personal potential
- ePaymentGuard offers affordable risk management and protection against credit card chargebacks for online payment processors
- HelloBit leverages digital currency and payment technology to reduce the friction and transaction costs in traditional money remittance
- LendSquare is a platform to crowdfund small business loans, allowing individuals to directly support businesses they believe in
- LendStreet helps distressed debtors settle, restructure, and refinance their debt while enabling investors to buy the debt at a discount
- Moneyworks provides an integrated solution to repay debt, establish and stick to a budget, and increase financial health
- MPower Financing is a peer-to-peer lending platform linking international and underserved college students with affordable student loans
- PeopleHedge protects individuals and small businesses from the volatility of foreign exchange rates
- Planwise uses online technology to provide financial tools to make help people make better choices in prospective financial and investment decisions
- Rezzcard is changing rental payment and collection for affordable housing through mobile electronic payment management
- SavedPlus makes savings easier by enabling automatic savings contributions alongside consumer spending
Crowdfunding for Community Development Finance
Hosted by the Federal Reserve Board of Governors, in partnership with the Federal Reserve Banks of New York and San Francisco, on March 24, 2014.
Peer-to-Peer Lending and Community Development Finance
Working Paper 2009-06 (August 2009)
By Ian Galloway
Also available as an excerpt in Community Investments Vol 21, Issue 3
2013 Disruption Ahead! Banking, Technology, and Low-Income Consumers
Videos from the event held in San Francisco on October 8, 2013.
The views expressed here do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.