Startup EarnUp Steps Up On Consumer Debt Paydowns

With the latest data coming in from our Investment Tracker, overall fund flow proved anemic for the week that ended November 4, at just under $140 million. Only $35 million of that was earmarked for B2B firms.

The U.S. and Europe dominated the fund flows, with 93 percent of the investment activity for the week confined to those geographies.

Classy, which helps raise donations through hosting online crowdfunding campaigns, grabbed $30 million in a series C round, from a series of venture capital firms, including JMI Equity along with Mithril and Salesforce Ventures.

And in what might have been one of the more unusual funding rounds seen in the investment realm last week — or in a long time, for that matter — a community bank in New Jersey, Cross River Bank, got $28 million in investments from Silicon Valley stalwarts including Battery Ventures and Andreessen Horowitz. Why unusual? The bank will be using that funding to help launch new fintech businesses, with an eye on expanding technology and development teams and boosting its compliance efforts. The bank has in the past partnered with more than a dozen online lending companies.

Last week was last week, and at this writing, the landscape may be changing for investments.  Uncertainty over the economic outlook tied to a Trump administration as well as two houses of Congress breaking his way may have a dampening effect on putting money to work in companies until some policies become clear.

In addition, one might wonder what the climate may be for companies that want to expand internationally (could they want to conserve cash or be reticent to hire overseas?). Time will tell.

EarnUp Sells Simplicity, Savings For Debt Holders

San Francisco startup EarnUp aims to take the worry out of loan payments.

It’s a newcomer on the startup scene. EarnUp did its first seed round this summer, earning $3 million from major venture capital firms including Blumberg Capital and Fenway Summer Ventures.

EarnUp’s premise is simple. Consumers sign up to link their bank accounts to EarnUp’s platform. EarnUp tracks users’ finances and makes payments toward outstanding debt whenever the customer can afford it.

“Our mission is simplifying people’s financial lives and helping them get out of debt,” said Matthew Cooper, CEO and cofounder of EarnUp.

“We bring all consumer loans into one place. When money comes into a consumer’s account, we budget a portion of that aside — we manage the process of debiting those funds and make the payments for them.”

EarnUp estimates that consumers using their service can save an average of $4,000 on typical student loan debt, or $22,000 over the length of a mortgage.

Consumers choose loan providers and generate income; the budgeting and payment side is taken care of. EarnUp is also free for consumers to use.

“Our largest revenue stream comes from channel partners: loan companies that offer our product as a payment option to their customers,” said Cooper.

Loan providers can offer the service to cut costs from missed or late payments, with the added benefit of increasing their customers’ financial health. EarnUp gets paid, while its users get financial peace of mind and have their loans paid off faster.

While Cooper didn’t disclose the number of users on EarnUp, he did say that the platform currently manages over $750 million in consumer loans. And there’s still more room to grow.

“There are $12 trillion worth of consumer loans that are outstanding, ” he said.

“For us, that translates to a $3 billion to $4 billion opportunity in terms of payment automation and payment support.”

Cooper notes that the majority of EarnUp’s users are lower- to middle-income, often with multiple streams of income, lines of credit and debts. “It can get complicated,” he says. “Your average American household is where we see the most engagement with the product. It’s also the consumer we’re most excited to help. There aren’t many financial products that cater to that market; there isn’t much financial innovation targeted toward that market.”

With the support of EarnUp, even lower- and middle-income consumers can start to put money away while also getting out of debt faster. So why isn’t everyone already using EarnUp? It’s free and hands-off. Sounds ideal.

“To our knowledge, there are no other startups or early-stage companies that currently offer something that I would view to be broadly competitive,” said Cooper.

The biggest competition out there for EarnUp isn’t another startup, it’s financial tradition — the ways most people think of to pay off debts. “Bank bill pay and writing checks are what we’re up against. People have ways that they’re used to dealing with their finances, and we’re trying to offer a new tool.”

EarnUp’s service is as of now unique, and its potential for growth is high considering the number of Americans in debt and that debt’s seemingly ever-increasing value. What it will take for EarnUp’s continued growth is raising brand awareness to financial insiders working in loans and to debt holders who may not yet know what EarnUp has to offer them.