Announcing Our Investment in Brigit: Aligning incentives to help users save over $250M in predatory bank fees
Financial stress has, unfortunately, become a way of life for many hard-working Americans, and COVID-19 has only widened the income inequality gap in this country. Recent reports estimate that as many as 78% of American workers live paycheck-to-paycheck; 69% of Americans have less than $1,000 in savings; and 45% have $0 in savings.¹² Furthermore, 90 million Americans have no access to the credit system.³ This means that a flat tire, an unforeseen trip to the doctor’s office, late cell phone payments or any number of life events can force many people into a cascading series of financial hardships and debt.
With few options, they often resort to predatory payday loans or overdraft their bank accounts. These overdrafts effectively act as high-interest loans and trap users in a perpetual cycle of debt, unfair fees and worsening credit scores. Taking advantage of this demographic has been big business for lenders and banks. Payday lending is a $6 billion industry in the U.S., and U.S. banks made $34 billion (98% gross margin!) in overdraft fees alone last year.⁴
Hard-earned wages that could be set aside to grow savings are, instead, spent on interest payments and fees. For too long, this cycle has perpetuated and driven consumers deeper into a spiral of ever-mounting stress and debt.
Brigit is here to break this cycle, and we could not be more excited to announce our investment. We led the seed round in 2018, and since then, they have helped over a million hard-working Americans save over $250 million in predatory fees.
How Brigit Works
Brigit’s app gives users personalized budgeting tools, spending insights plus cash if they need it (up to $250) — all without interest or credit checks. All a member does is sign up with their email, phone number and checking account, and they are approved in 90 seconds or less. Brigit is the ONLY company that predicts when a user’s bank balance will dip negative and can send them an advance automatically to make sure they don’t overdraft. Over time, as they have greater control over their finances, they can save more for the future and never risk falling short again.
Brigit creates a personalized experience for each member by formulating a deep understanding of their unique cash flow mismatches and spending habits. Since Brigit charges a monthly membership fee, its business model doesn’t rely on members’ continuous use of advances or borrowing in ever-larger amounts. All of this for $9.99 per month.
This business model alignment with customers creates a transparent, fair and simple, financial product. It is also what got my partner Jason Krikorian and I so excited when we led the seed investment in 2018.
Brigit is a financial health company that succeeds when its members save. To quote one of Brigit’s advisors, Corey Stone, Former Assistant Director of the Consumer Financial Protection Bureau, Overdraft Division,“Brigit benefits when its members are able to better manage their cash flow and use advances with less frequency.”
Brigit’s goal is the same as that of each of its members — to make meaningful progress towards good financial health. This is the single most important reason we are supporting Brigit.
Introducing the Team
Brigit is led by a team that has the right combination of skill set and empathy to accomplish this mission. Zuben Matthews, CEO, came to this country as an immigrant (recently naturalized!) and experienced financial stress firsthand. Throughout an 11 year career at Deutsche Bank, where he created and led a principal investment group, he had always wanted to develop technologies that could provide financial services leveraging cash flow as opposed to a credit scoring system that had failed him.
Hamel Kothari, CTO, was one of the youngest team leads at Palantir Technologies and Two Sigma Investments, respectively. He has a wealth of knowledge leading big data and machine learning teams. In his own words, “I co-founded Brigit because I couldn’t bear to work on anything else. I know just how deeply financial stress can affect people’s lives. I’ve watched people I love struggle with it. Now I spend every day building a more financially inclusive world.”
Additionally, Brigit is also announcing that our good friends at Lightspeed Venture Partners are leading a $35 million Series A round with participation from Nyca Partners, Canaan, DN Capital, CRV, Core Innovation Capital, Shasta Ventures, Hummingbird Ventures, Abstract, Brooklyn Bridge Ventures, Secocha, Ashton Kutcher’s Sound Ventures, and the impact-focused Flourish, a venture of The Omidyar Group. A number of former founders have supported Brigit as well, including Kevin Hartz (co-founder of EventBrite and Xoom) and Ori Allon (co-founder of Compass), among others.
Brigit is just getting started — we have embarked on a long journey to uplift everyday Americans from their financial stress. If you’re just as passionate about building a platform that helps the financially underserved, we’d love to have you join us on our mission.
- Jason and David
