Immigrants and African Americans have for a long time been subjected to challenges of low credit scores in comparison to other populations in the U.S.
A recent survey conducted by Credit Sesame, a credit and loan firm, showed that about 54 percent of black Americans report having no credit or a poor to fair credit score.
The situation has made victims vulnerable to predatory lending, putting them in a cycle of financial insecurity as they do not have access to build credit nor possess strong credit scores to build wealth.
To help address this challenge, Esusu, a fintech that targets immigrant and minority groups and provides rent reporting and data solutions for credit building, said it has raised $130 million in a Series B fundraising round.
The funding round was led by Softbank Vision Fund 2 with participation from Jones Feliciano Family Office, Lauder Zinterhofer Family Office, Schusterman Foundation, SoftBank Opportunity Fund, Related Companies and Wilshire Lane Capital.
In addition, investors such as Motley Fool Ventures, who was the lead investor from its $10 million Series A round in July 2021, also re-invested in the new financing round while other existing investors, including Concrete Rose Capital, The Equity Alliance, Impact America Fund, Next Play Ventures, Serena Ventures, Sinai Ventures, and TypeOne Ventures also participated.
The Series B fundraising round gives the firm a valuation of $1 billion, making it one of the very few startups with a black founder to reach unicorn status.
The firm stated that the fund would be utilised towards scaling its team and driving growth through product innovation while also building the most comprehensive financial health platform in the market.
Abbey Wemimo, a Nigerian born American and Samir Goel, an Indian American, who are interestingly the co-founders and co-CEOs of the company explained that Esusu was established as a result of their first hand financial experiences growing up in immigrant homes.
They added that Esusu was founded with the vision of using data to bridge the racial wealth gap and create more equitable financial opportunities for low-to-moderate-income households.
“By establishing and improving credit scores, we are strengthening financial identities while empowering individuals, families, and communities to meet their long-term financial goals,” the co-founders noted.
In total, Esusu has raised over $144 million, thus joining a group of black-led and owned startups globally that have achieved the unicorn valuation out of more than 900 companies. These companies include U.S. scheduling app, Calendly ($3 billion); U.K.-based fintech Zepz ($5 billion) and digital insurance startup Marshmallow ($1.2 billion), African fintechs – Flutterwave ($1 billion), Chipper Cash ($2 billion) and Interswitch ($1 billion).
Esusu was founded in 2018 to build the credit scores of marginalised groups and leverage data to bridge the racial wealth gap via rental payments.
The New York-headquartered fintech partners with property owners and housing providers and works, including Goldman Sachs, Related Companies, Starwood Capital Group and Winn Residential.
Esusu captures on-time rental payment data of renters who opt-in to its platform and reports to the three major credit bureaus; Equifax, TransUnion and Experian, to strengthen their credit scores.
Through this, renters are financially empowered to work their way to better credit scores over time while Esusu helps property owners mitigate against initiating evictions.