SoLo Funds operates a community peer-to-peer lending platform. The company announced 1 million registered users as of 2023, making it reportedly the largest black-owned financial technology company in the United States.
| Industry | Financial technology |
|---|---|
| Founded | 2018[1] |
| Founders | Travis Holoway, Rodney Williams[1] |
| Headquarters | Los Angeles[1] |
Area served | United States |
Key people | Travis Holoway (CEO)[1] Rodney Williams (president)[2] |
| Products | Peer-to-peer lending |
Number of employees | 90 (2023)[3] |
The company was founded in 2018 and is based in Los Angeles.[1]
History
editSoLo Funds was founded in 2018 in New York City by Travis Holoway and Rodney Williams.[3] The idea for the company came when founders shared a mutual experience of friends and family needing short-term loans but had very limited and costly options.[3] They wanted to develop a community based lending marketplace for small dollar amounts as an alternative to banks and high-interest credit cards.[3]
The founders took the company through the Hillman Accelerator in Cincinnati, and in July 2018, they were accepted into the Techstars Kansas City program.[4] In January 2019, the company relocated to Los Angeles.[4]
In 2019, the initial version of the company ran out of money and shut down.[2] The founders relaunched the company in April 2020 with different features, including protection for lenders.[2]
In February 2021, the company raised $10 million.[5] In 2023, the company announced an investment from investors including tennis player Serena Williams's Serena Ventures.[2] Also in 2023, the firm made CNBC's Disruptor 50 2023 list.[1]
In November 2021, the company earned B Corp certification for its social impact.[6]
In April 2022, the company released the digital SoLo Wallet, allowing customers to add or access funds to their bank accounts and debit cards.[7]
In February 2023, the company reported 1 million registered users and over 1.3 million downloads of its app, claiming to be "the largest and first Black-owned personal finance platform".[2] The company also reported it had processed over 600,000 loans, accounting for $300 million in transaction volume.[2]
In May 2023, the company settled regulatory cases in California, Connecticut and Washington DC, over allegedly misleading consumers about interest rates and fees as tips and donations.[8] The company defended its tipping and donation model, but paid some penalties and agreed to make disclosures about tips and donations being voluntary.[8] Also in May 2023, the company was named to news channel CNBC's Disruptor 50 list.[1]
In December 2023, Maryland regulators raised similar allegations.[8] In May 2024, the Consumer Financial Protection Bureau (CFPB) sued the company over its lending model.[9] In response, the company issued a statement that it had been working with the CFPB for 18 months, yet after seemingly agreeing on a resolution the night before, it was surprised to see the lawsuit filed.[9]
In February 2024, the company reported almost 2 million users of its app.[6]
In July 2024, Pennsylvania Attorney General Michelle Henry announced a settlement with SoLo Funds for a regulatory case similar to those brought earlier by other states.[10] The settlement, in the form of an assurance of voluntary compliance, required SoLo to pay a penalty and modify its business practices to comply with Pennsylvania law.[10] Also in July 2024, CNN Underscored editors rated SoLo Funds as the best peer-to-peer lending app.[11]
Business model
editSoLo Funds develops a marketplace that allows borrowers to request loans and lending members to fund borrowing requests.[12] The loans are technically interest free, but borrowers can tip their lenders or make a donation to the company. As borrowers develop a lending and repayment history, they can borrow higher amounts and organically pay lower tips.[12] Borrowers who don't pay the loan back on time are charged a one-time late fee and an administrative charge after 35 days.[12] The amount owed or fees incurred don't increase over time, as opposed to how traditional lending products work.[12] Defaulted borrowers are sent to collection agencies, and can be blocked from the platform.[12]
In 2023, the company reported borrowers paid an equivalent average annual cost of 13.4%.[3]
Leadership
editSoLo Funds' co-founders are CEO Travis Holoway, and president Rodney Williams. Holoway is from Cincinnati, graduated from the University of Cincinnati, and was a financial advisor in New York City with Northwestern Mutual.[13] Williams is from Baltimore, graduated from West Virginia University and earned an MBA from Howard University.[14] He worked at Lockheed Martin and Procter & Gamble before founding the ultrasonic communication company Lisnr.[14]
References
edit- ^ a b c d e f g staff, CNBC com (May 9, 2023). "50. SoLo Funds". CNBC.
- ^ a b c d e f Hall, Christine (February 28, 2023). "Serena Ventures backs SoLo Funds as finance platform tops 1M registered users". TechCrunch.
- ^ a b c d e "Tech entrepreneur from Baltimore started the nation's largest Black-owned fintech platform, a peer-to-peer microlender". December 3, 2023.
- ^ a b "Cincinnati financial tech startup relocates to Los Angeles". Cincinnati Business Journal. January 22, 2019. Retrieved July 25, 2024.
- ^ Shieber, Jonathan (February 10, 2021). "LA-based SoLo Funds raises $10 million to offer an alternative to predatory payday lenders". TechCrunch.
- ^ a b "SoLo Funds nears 2M users". Banking Dive.
- ^ "SoLo Funds releases the SoLo Wallet and seeks to empower borrowers". ZDNET.
- ^ a b c "Maryland regulators investigating online lending marketplace started by Baltimore native". December 12, 2023.
- ^ a b Hall, Christine (May 20, 2024). "Fintech lender SoLo Funds is being sued by the government over its lending practices". TechCrunch.
- ^ a b "AG Henry Reaches Settlement with California-Based Lender over Alleged Illegal Tip and Donation Scheme, Saving Pennsylvanians Hundreds of Thousands of Dollars".
- ^ "The best loan apps of July 2024 for small-amount borrowing". CNN. July 12, 2024. Retrieved July 25, 2024.
- ^ a b c d e "These 2 Black founders aim to offer a fairer alternative to payday loans". Fast Company. February 18, 2021. Retrieved July 25, 2024.
- ^ "Meet App-Based Loan King Travis Holoway". Lifewire.
- ^ a b Clifford, Catherine (July 5, 2018). "This 34-year-old went from a six-figure corporate salary to $100,000 in debt running his start-up — here's what he learned". CNBC.