Financial app FloatMe aims to change the way millennials interact with their money, starting with covering cash gaps and saving for emergencies.
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Co-founder and CEO Josh Sanchez knows about this personally: He was involved in a car accident and didn’t have a credit card, so he did a pay-day loan instead that ended up putting him in financial hardship.
“People in general are overborrowing, and when we investigated transactional patterns, we learned that they didn’t need as much as they were borrowing,” he told Crunchbase News. “Members told us they get into a bigger hole borrowing $200, so we are helping to prevent the vicious cycle by offering a cap.”
What FloatMe offers are benefits that include interest-free and credit-free “floats” of up to $50, account monitoring to prevent overdrafts, and savings and education tools. All this in a program that takes less than two minutes to sign up for and charges a monthly membership fee of $1.99. Premium services, such as expediting funds, come with additional costs.
The startup, headquartered in San Antonio, Texas, and Cleveland, brought in a $3.7 million seed funding round to assist with its mission. The financing was led by ManchesterStory. Joining in the funding was Active Capital and SpringTime Ventures, as well as existing investors including Drummond Road Capital and HTV Industries.
“With so many Americans living paycheck to paycheck or simply needing a small loan every now and again, predatory industries have stepped in to take advantage of them,” said Pat Matthews, CEO of Active Capital, in a written statement. “FloatMe is an incredible alternative to high overdraft fees and payday loan providers, both of which lead to overborrowing in addition to crazy interest rates.”
Although this was FloatMe’s first institutional funding, it raised a few smaller rounds to give it a total of $4 million in funding since the company was started in 2018 by Sanchez, CTO Chris Brown, and COO Ryan Cleary. As part of the investment, Matt Kinley, managing partner of ManchesterStory will join the company’s board.
The new funding will be used to continue growing the company’s member base, scaling, and developing new resources its members are requesting. The app kicked off in February, helping FloatMe grow more than 30 percent month over month, while also helping members save $12 million in overdraft fees.
“We’ve been scaling over the past six to eight months and looking at product expansions,” Cleary said in an interview. “We are now hyper-focused on the customer experience, as well as driving hiring within our engineering and data teams across 2021.”
Feature photo courtesy of FloatMe: Founders Ryan Cleary, Josh Sanchez and Chris Brown
Blogroll illustration: iStock
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