Values-Aligned Collaboration Unleashing Financial Health

Many organizations are throwing aside the “go-it-alone” mentality in favor of working together to address complex challenges and scale their innovations.   Increasingly, collaboration can be a competitive advantage for FinTech startups focused on improving the financial health of underserved consumers and small businesses. And as more innovators and startups consider partnership as a path to scale, it’s especially important to think about mission and values alignment as a key factor for success.   At the annual SXSW Festival in Austin, Texas this year, Village Capital and PayPal brought together leading financial technology entrepreneurs, investors and thought leaders for a conversation about entrepreneurship and financial health in the United States. The problem: more than 24 million American households are financially underserved, and the Center for Financial Services Innovation found that underserved Americans spent $141 billion in fees and interest to meet their financial needs. Meanwhile, many small businesses struggle to get a loan.   That’s where startups come into the picture. There are countless innovators and startups using FinTech to create access, efficiency and affordability in the market: whether they’re building financial resilience like WiseBanyan, offering non-traditional lending models like Fig Loans and MPower, improving transparency in insurance like Upsie, or helping people pay off debt like Student Loan Genius or Lendstreet.   Since 2014, Village Capital and PayPal have teamed up on six venture development programs in the US, India and Latin America, supporting more than 70 ventures that are improving financial health from diverse communities. These entrepreneurs have gone on to create more than 120 jobs, serve more than 31,000 customers, and raise more than $28 million in investment.   An important part of our programs is facilitating relationships and collaborations between the entrepreneurs and mentors from large organizations, including PayPal. This maps to an overall trend toward partnership across the financial services ecosystem. In recent years, there’s been an uptick in collaborations between FinTech startups and large organizations. FinTech startups have begun serving as a sort of external innovation arm for large companies, from Bank of America to the Disney Credit Union. The large company gets a chance to understand and possibly absorb the latest innovations; the startup gets critical support.   In our six programs, we’ve consistently focused on facilitating collaborations that are values-aligned: matching entrepreneurs with mentors from large organizations that share their core values. I spoke about this with Vicki Zhou, Co-Founder and Co-CEO at WiseBanyan, an online investment advisor that aims to make investing easier for millennials and teach financial literacy (and an alumnae of a Village Capital/PayPal program).   “We’ve found it extremely valuable to work with large organizations that share our values. When you share a basic understanding about what you’re trying to achieve, it really streamlines the decision-making process,” Vicki told us.   “For instance, early on at WiseBanyan we looked for a partner who focused on scale in terms of linking or integrating with bank accounts so that we could help everyone achieve their financial goals. We deliberately chose to work with a firm that is publicly committed to giving all consumers access and agency, including those who are underserved. Working with them allowed us to eliminate account minimums so that people could start saving, investing and achieving their goals – even with just $1. To do this at scale we're doing today, we absolutely needed the right partner.”   The need for values-based partnerships was just one of the conversations we had at SXSW, and just one of the things that excites us about Village Capital’s partnership with PayPal. We just closed out applications for Village Capital FinTech: US 2017, a program for FinTech startups creating accessible, efficient, and affordable financial services in the United States. Through this program and others in India, Africa and Latin America, we’re looking forward to working with PayPal to facilitate more values-aligned collaborations in 2017.

Contributing Writer, Ross Baird, CEO, Village Capital