More than 100 million Americans spend an average of $1,100 (over $1.4 trillion per year) on their largest monthly household spend: rent. But reports say 90% of these people don’t get credit for paying their rent on time.
On a sub-level, over 45 million people in the U.S. don’t have credit scores, according to a 2020 report by the Consumer Financial Protection Bureau. Most of this demography are financially marginalized due to their background and race.
Esusu, a fintech that targets immigrant and minority groups and provides rent reporting and data solutions for credit building, said Thursday it has raised $130 million in a Series B fundraising round.
The investment gives four-year-old Esusu a valuation of $1 billion, placing it as one of the very few black-owned unicorns in the U.S. and globally. SoftBank Vision Fund 2 led the funding round, with participation from Jones Feliciano Family Office, Lauder Zinterhofer Family Office, Schusterman Foundation, SoftBank Opportunity Fund, Related Companies and Wilshire Lane Capital.
Immigrants and African Americans have lower or non-existent credit scores than other populations. To a large extent, they also witness more predatory lending, putting them in a cycle of financial insecurity. So, while they need strong credit scores to build wealth, they do not have access to build credit.
Esusu co-founders and co-CEOs Nigerian-born American Abbey Wemimo and Indian American Samir Goel grew up in immigrant homes and experienced firsthand this financial exclusion. They started the company in 2018 to build the credit scores of this marginalized group 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 with 35% of the largest landlords on the National Multifamily Housing Council (NHMC) list. Its partners include 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. This way, renters can work their way to better credit scores over time while Esusu helps property owners mitigate against initiating evictions.
Esusu charges property managers and owners a $3,500 set-up fee and $2 per unit monthly. Renters, on the other hand, pay an annual subscription fee of $50 to report their rental payment data to credit bureaus.
The founders told TechCrunch that Esusu has a 600% year-over-year growth rate. Over 2.5 million homes currently use its service, representing over $3 billion in Gross Lease Volume (GLV) across the U.S., up from 2 million homes and more than $2.4 billion in Gross Lease Value the company reported six months ago.
In April 2020, Esusu launched a rent relief fund after carrying out a survey on its platform that showed that 62% of its users would not be able to pay their rent on time due to the pandemic’s effects. The company raised almost $500,000 via crowdfunding and nonprofit impact investment funds.
Two years on, that program still runs and Esusu has scaled it to keep thousands of renters in their homes. The program has garnered partners with more than $1.7 billion on their balance sheet, Esusu founders told TechCrunch.
“We founded Esusu with the vision of using data to bridge the racial wealth gap and create more equitable financial opportunities for low-to-moderate-income households in this country,” Wemimo and Goel said in a statement. “By establishing and improving credit scores, we are strengthening financial identities while empowering individuals, families, and communities to meet their long-term financial goals.”
Esusu plans to use the funding to scale its team (triple its employees to be exact), “turbocharge growth through product innovation, and build the most comprehensive financial health platform in the market.”
Motley Fool Ventures, the lead investor from its $10 million Series A round last July, re-invested in this new financing round. Other existing investors Concrete Rose Capital, The Equity Alliance, Impact America Fund, Next Play Ventures, Serena Ventures, Sinai Ventures, and TypeOne Ventures, doubled down too. In total, Esusu has raised over $144 million.
With this funding, Esusu joins a coveted small group of black-led and owned startups globally that have achieved the coveted unicorn valuation out of more than 900 companies. They include U.S. scheduling app Calendly valued at $3 billion; U.K.-based fintech Zepz at $5 billion and digital insurance startup Marshmallow at $1.2 billion; and African fintechs Flutterwave ($1 billion), Chipper Cash ($2 billion) and Interswitch ($1 billion).