More and more employers are adding financial products to their employee benefits and perks, and many startups have jumped into this sector to help.
Financial technology company Cashable It is the latest to have also attracted some venture capital attention for its approach of offering credit and financial wellness products as a voluntary employer-sponsored benefit.
Kashable lending application. Image credits: Cashable
The company raised $25.6 million in Series B funding. Revolution Ventures and Moneta Ventures co-led the round and were joined by EJF Capital and Krillion Ventures. In total, the company has raised $45 million in equity capital and more than $175 million in debt capital.
Financial wellness is one area that many startups are getting into. For example, Payroll Integrations, Minu, HoneyBee, Addition Wealth and Origin — to name a few — have raised venture capital in the past three years for their own approaches to adding financial well-being to employee benefits.
However, Ainat Steklov and Rishi Kumar, co-founders and co-CEOs of Kashable, say their company is different in that it not only provides access to free financial education tools, but also offers employment-based loans.
“When we first started our journey in 2013, financial wellness was just a nascent concept,” Kumar told TechCrunch. “We have spent a lot of time educating the employer community about the need for this type of financing.”
However, Kumar said that during the global pandemic, when millions of people lost their jobs, it highlighted the number of Americans who do not have a single paycheck equivalent to a cut in savings.
In an effort to help employers offer meaningful benefits and employees an alternative to borrowing from 401(k) or other retirement plans, Kashable offers average loans of $4,000.
It integrates with a company’s payroll systems and then uses that data to enhance its fully automated underwriting ability to provide affordable credit to that company’s employees. Its algorithm takes into account group and individual employment data, income stability and other factors. Loans are automatically paid back through payroll deductions.
Additionally, Kashable provides financial education resources, including credit monitoring, one-on-one financial coaching, and budgeting tools. It’s all free and employers control what their employees have access to.
“People who have borrowed from Kashable have seen their credit scores improve, and they can see how their actions actually translate, on a monthly basis, into credit,” Steklov said in an interview. “Two-thirds of people see a credit score improvement of 40 or 50 points on average. This is important. It can move people out of subprime tier to near subprime tier. That makes a difference from being able to borrow or get a mortgage on a house.”
Since founding Kashable in 2013, the company has made 300,000 loans through more than 250 employers, including Cigna, Reid Health, Huntington Ingalls, Alight Solutions, and Chobani. The company’s revenue has grown 50% annually over the past few years, the founders say. It has also provided $300 million annually in loan volume.
Meanwhile, Steklov and Kumar intend to use the new capital for expansion, offering more credit, additional financial well-being services and employment. They plan to grow the R&D team to further develop the financial product portfolio and its underwriting model.
David Golden, managing partner at Revolution Ventures, and Merav Har Noy, co-founder and managing partner at Moneta Ventures, will join Kashable’s board of directors as part of the investment.
“This is an area that I find inherently interesting because there is a lot of innovation in how we provide credit to the underbanked,” Golden said in an interview. “It’s a big problem in the US. It’s an area that has been widely embraced by the enterprise community but hasn’t been very successful. Kashable has a different model of customer acquisition through employers and a different underwriting model. They can see real-time employment history and get payroll “Bi-weekly. I haven’t seen that anywhere else in the United States.”