Please introduce yourself and your business.
My name is Rodney B. Williams and I am the Co-founder and President of SoLo Funds.
Our story starts the way every SoLo borrower’s request begins: with someone needing a hand.
I was raised in Baltimore, Maryland, by two working-class entrepreneurs who taught me the importance of independence, consistency and endless pursuit of one’s dreams. They were my first source of inspiration. They instilled wisdom and lifelong lessons while growing up that I’ve applied throughout my entire career. Regardless of our financial position, I attended private school my entire life as they strived to show me a world greater than my street block. I have 4 degrees, ran collegiate track at WVU and have over 10 patents to my name. But despite my parents’ ambitious pursuits, we faced financial difficulty.
There were moments when my mom–just a few days shy of her scheduled payday–needed a few hundred dollars to keep the electricity on. Often, she couldn’t get it in time. Just like many Americans with limited savings, any shifts in expense would result in things getting unpaid. We were no different and in most instances it meant the electricity would be turned off for a few days resulting in significantly more costs. No electricity meant very cold or hot nights depending on the season and food being spoiled. This is just what I experienced as a child.
My parents would face tougher challenges. Payday loans were a wish and in most cases not an option. My mom had credit cards but they were even more expensive. Our only options were to get out of the situation ourselves which would involve waiting till next pay. My childhood was filled with many such memories as my parents forged ahead, trying to maintain adequate cash flow while running an eight-member household through most of my childhood years.
My co-founder, a Cleveland native, Travis Holoway, is my best friend. And he saw similar experiences to mine, but also saw an additional need for his community to grow their discretionary capital. His father held a stable career working for General Motors for over 35 years. He made sufficient savings, but these savings never substantially grew over time. He was equally being underserved by our financial system just as my mother. Where my mom needed capital, his father needed his capital to grow.
However, the community he lived in wasn’t as fortunate. His neighbors, family and friends were underserved in many aspects of life, including nutrition, education and financial services. In most cases, having no borrowing options meant going without necessities. While there was a need, resources were scarce.
Our communities have always stepped up from each other when in need. Travis’s dad was this for many in his close circle. This is a similar story to many Americans across America. Despite the hurdles, there was always a desire for advancement. These are some of the fundamentals that created Travis' vision for SoLo.
Besides my parents, one of my core mentors is an investor in SoLo, Richelieu Dennis. I’ve been fortunate enough to learn from Richelieu who is one of the most impactful Black pioneers of our time as the founder of Essence Ventures and Shea Moisture.
What do your operations look like today?
SoLo is a consumer to consumer personal finance solution. Unlike most platforms in the market, SoLo is completely powered by the people. Which means that borrowers can set the terms of their loans such as the amount and repayment date, and post their loan terms on our peer-to-peer marketplace where anyone can elect to loan those requests. Once that happens, an individual lender can fund that loan directly - and within minutes it can hit a borrower's account; this is community finance. There is no institutional capital with SoLo and we don’t charge mandatory fees which is a rarity for other cash advances or personal loan apps. We have a voluntary fee structure that includes an optional tip to the lending member and donation to the platform. Our business model is focused on marketplace/banking activity, transactions and safety. We also operate a mobile app that is available on Android and iPhones.
SoLo is based in Los Angeles, CA and we have just over 100 employees. Our team consists of great talent within our departments from product to engineering, design, legal, regulatory, growth and customer support. We hired engineering first. We are a technology company and we are non-tech founders, so those hires where key. Everything else was initially outsourced.
We like to consider ourselves a fully remote / dispersed workforce where we have team members across the world helping build SoLo. As a purpose-driven company, all team members believe in the same mission. It’s reassuring to know that working class people all over the world have the same challenges with their financial institutions. We are all passionate about the problem we’re solving and as founders it’s important that everyone who chooses to join our mission feels supported and trusted to try new things, learn and grow together.
How did you discover the problem you are solving?
My co-founder, Travis and I are African American financial technology founders – in rare positions that may be held by more if it weren’t for historical injustices experienced by Americans of color.
These injustices triggered our pursuits in financial services as well as the same injustices we’ve experienced bringing a solution to the market that is driving change for everyday Americans. SoLo (short for Social Loans) as a concept was sparked by experiences we shared hailing from predominantly Black cities.
The financial system has long failed most Americans by not providing returns or access to short-term cash needs when everyday people need it most. They’ve ignored our communities and our needs. Fast forward to 2018, Travis and I had built successful careers and were tired of financial service companies falling short, and not serving a consumer base they frankly did not understand. So we wanted to create something different, something more human-centered.
We pooled together our experiences working in finance at Northwestern Mutual, brand management and technology at Procter & Gamble and FinTech provider LISNR to start building the bridge that wasn’t there. We created a community where people could support each other financially. We founded SoLo Funds to provide a pathway for Americans to access short-term capital through their peers as well as grow the capital they already have by lending to one another. We call this approach community finance.
At SoLo we were determined to do things differently as we didn’t want to become another predatory payday lender. Our entire community-based driven model does everything payday lenders don’t do. They often trap borrowers in a cycle of debt from which there’s no escape, and they offer high-interest, and short term loans to those who are at their most vulnerable. We would never do that, and our customers trust and value what we’re building, which would explain our high NPS score.
The legacy financial system has failed and taken advantage of most Americans, and they mainly design products for people who have money, not those without. The recent news from the Biden administration, FTC, and California going after junk fees is a great start. They stress transparency, and that’s something we uncovered in the banking and financial institutions with our recent Cash Poor Report which analyzes how much it really costs to borrow money.
For Americans living paycheck to paycheck they’ve paid a staggering $25 billion dollars in fees. Misleading APR (Annual Percentage Rate) doesn’t include everything that a consumer pays when borrowing money, with the biggest culprit being traditional financial services like credit cards and payday loans. This only adds to the sticker shock and detrimental impact on households when managing planned or unplanned expenses.
Congress, financial institutions, and regulators need to replace the APR with the Total Cost Rate (TCR) so that it’s clear on what the borrowing costs are so that consumers are empowered and can make more informed decisions in today’s tough economic environment. The APR should never have been the industry-wide standard since it isn't the total cost consumers incur when borrowing money as the APR does not include these hidden fees. Borrowers face additional charges that fall outside of the APR - causing even more confusion for individuals already in a financial pinch. Congress and regulators need to go a step further and address this inaccurate calculation by adopting a new approach that we created called the Total Cost Rate (TCR). The TCR isn't meant to trick consumers like APR has but rather includes everything that a consumer pays in addition to the principal. It's the necessary assessment of how much costs really are when they include all additional fees paid in addition to the principal and not limited to APR.
Walk us through the specific steps you took to get started with your business.
The best businesses are built by solving everyday problems, which is what we did with SoLo. We saw a problem that our family and friends kept experiencing as it relates to their spending and personal finances: needing money and not being able to access it, or having money in the bank not yielding or growing. This is why we were and are so adamant on providing a solution because it hit so close to home. It stemmed from both my and Travis’ households.
For too long there have been limited options for individuals in need of immediate funds due to planned and unplanned expenses and circumstances. We did a ton of market research in that we initially spent 2 years of just research, then a full year participating in accelerators across the country including Lumos inColumbus Ohio, Hillman in Cincinnati, and Techstars in Kansas City.
And it also helps that Travis and I are best friends and share the same values on showing how our platform and its growth is further proof that people want to support one another and make a positive impact.
SoLo also isn't my first rodeo. My first company LISNR is still active today and raised well over $40M with its largest investor being VISA. When we decided to start SoLo, we had angel investors jumping at the opportunity because they saw the massive problem and banking gap we set out to solve.
Within the 1st 20 minutes of being live on the app store someone organically signed up and made a loan request and then a complete stranger funded that request - it was magic and abundantly clear that this is real.
If I could go back and give advice to my younger self, I would tell him to get ready and stay that way! Fintech requires a ton of legal and regulatory support at all phases of the business. The roadblocks for someone to create a bank, or become a lender in the US are systematically difficult and in part discriminatory. By design due to the costs, only the wealthy or someone with the ability to raise significant capital can meet the requirements. New founders are at a disadvantage and will experience problems that can only be avoided by significant capital. We didn't underestimate this need, but I would emphasise this if I could go back in the past when we first brought our product to market.
We had to really embrace the ability to learn and be wrong. Which can be hard when you’re the founder and you think of your company as your baby. But in reality, when we started we were babies in fintech - it was new to us. Fast forward to now and we’re leaders. We had to learn our way here, it didn’t just happen overnight.
At SoLo, we always did what felt right inside. Being in the financial services space, your moral compass has to be sharp. We made sure to practice ethical behaviors and live up to our values of bettering underserved communities across the world.
How did you acquire your first customers?
SoLo has had remarkable organic growth and it’s mainly been from word of mouth since inception. And it remains that way today. This has been the most powerful tool for us as we set out to solve a problem that millions of consumers and households deal with. If you think about it, most purchases or app downloads, new customers come based on recommendations - we’ve been able to scale from this as our product is trusted in the industry and amongst peers with an Net Promoter Score of 90, which we measure daily..
What are your three most impressive accomplishments so far?
SoLo has reached 1.3 million registered users with nearly 2M downloads and have surpassed 1M loans funded in September.
SoLo also secured regulatory wins in DC and California, giving them a clear regulatory pathway forward.
How do you measure your social/environmental impact & keep it at the core of your business?
SoLo officially became the first ever Black-owned certified B-Corp fintech in the U.S. and Canada in December 2021. By doing this, we made a commitment to showing up and making a real impact for everyone by using business as a force for good as we operate and scale.
What has been the hardest lesson you had to learn in your journey as a founder?
It’s been a constant uphill battle. We’ve raised significantly less capital than our comps in financial services despite outperforming their metrics. Most of the investment we have secured has come from Black investors, both through VC firms and on an individual basis. It’s no secret that Black-led businesses experience banking discrimination.
We’re also held to different investment standards and subjected to more scrutiny than our counterparts. That limits our capacity to grow, which in turn increases our margins for error. Recent Crunchbase data shows that venture capital for Black entrepreneurs plummeted 45% in 2022, amounting to less than 2% of the overall dollars invested. While market conditions changed drastically last year, this was still just two years on from the bold and lofty pledges many financial institutions made in the wake of George Floyd’s murder in 2020.
How did the experience of building a startup change you?
Focusing on and prioritising these 5 necessary traits and practices
1 – Appreciation
2 — Self-care
3 — Persistence
4 — Consistency
5 — Vision
6 — Learning
These words of advice I’ve received along my journey all go hand-in-hand. It all starts with appreciation — for myself, my supporters, and my mission. I’ve always had appreciation but I’ve just recently reached a new level where I highly appreciate people who appreciate others and I’ve turned into a protector of those who do not. It’s important to treat people well, in addition to yourself.
This leads me to self-care — you can’t make a difference if you’re not taking care of yourself. I have a daily routine that includes a workout and time for myself.
Additionally, consistency and persistence are similar words of advice, but to me they are different. While consistency is the act of being consistent, persistence is the act of being consistent no matter the obstacle — powering through to reach your goal.
Vision is the one thing that you need in order to continue on. You need to have a vision to work toward in order to achieve your mission.
And lastly, learning, and really I mean continuous learning will make your business unstoppable and expand it to new levels of growth.
What are your long-term goals for SoLo Funds?
To become the global financial service company for the global middle class. We’ll be launching in our first international market next year and continue to grow into additional financial services designed to the middle and working class, all powered by the people.
We’re shifting the power from financial institutions to the people, and although the communities we are shifting the power to are experiencing a positive disruption with power being shifted to them. When we started SoLo, we went straight to the problem we were most intimate with, which was access to short-term capital. There’s a lot of money that leaves underserved communities and never makes its way back. We wanted to really fix those two things. Conceptually, we are helping shift more power to the people. It’s very disruptive. Each and every day, I really think we’re really making a difference in those communities.
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