January 7, 2015
The company behind Even, a mobile money management app, has raised $1.5 Mn in seed funding. The seed round was led by Khosla Ventures. The company offers low-income workers, awaiting paychecks, with interest-free credit. The company’s key services provide workers with alternatives to payday loans and other traditional lending products where compounding debt make things difficult for workers.
The income inequality in the US creates an ironic situation in which money becomes increasingly expensive for the poor. Low wage workers face huge difficulties in obtaining financial services because of their economic condition, not just the challenges of poverty. Even having a car towed can lead to losing the place you live in. Much of the consumer-facing technology from Silicon Valley doesn’t always meet the needs of the many. According to the U.S. Census Bureau, 45.3 million lived in poverty in the US in 2013.
To address such challenges, the company’s idea is to offer consumers with interest free credit to get them through bad days. Customers using the Even app allow the company to manage the money on behalf of their customers. During the financially ‘normal’ days, the company keeps a little money aside as backup credit. During the financially unstable days, users can tap into that credit to pay bills and handle other expenses.
This lending program is still in the pilot testing phase, available to customers via the mobile app. Customers receive a steady amount from week to week, even though they drag more hours in some weeks and work less hours in some other weeks. The service works in sync with a customer’s bank account and offers features like automatic budgeting and aid in emergency expenses. Users can also do a pause on the $5 per week charge during periods of unemployment.
The core idea behind the service is to be lenient to customers and maintain a relationship with the customer even during bad times. The app Even will cost users $260 per year but it’s still inexpensive as compared to other payday lenders. Moreover, for low wage workers, this will ensure that their bills and rent get paid on time.