Fintech Guava raises $2.4 million to provide banking services to black small business owners

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Guavaa banking and networking platform targeting Black entrepreneurs, today announced the closing of a $2.4 million pre-seed funding round led by Heron Rock.

Founded last year by Kelly Ifill, the company aims to close the racial wealth gap by providing financial services to black small businesses and creators. The digital banking platform – set to officially launch early next year – allows entrepreneurs to check expenses, budget, transfer money, track growth and connect with others entrepreneurs looking to scale their business.

Ifill said fostering a safe community for black founders is a personal passion, noting that small businesses are the “backbone” of the US economy. She said entrepreneurship could be an economic and social equalizer if black people were given more opportunities to participate equitably.

Indeed, the Harvard Business Review reported last year that black women are more likely to start businesses than white men. At the same time, Bloomberg reported that black founders – Black women in particular — were the fastest growing cohort of entrepreneurs. And yet, black founders receive less than 2% of all venture capital financing, and only 3% black women run mature businesses. During the pandemic, more than 40% of black businesses closed, compared to 17% of white-owned businesses; moreover, the cohort was disproportionately incapable to get Paycheck Protection Program loans to keep their businesses afloat.

“Black people were meant to be entrepreneurs, we were meant to build businesses to support our families, but because of racism we were shut out of so many opportunities,” Ifill told TechCrunch. “Guava aims to tackle the racial wealth gap head on by facilitating the growth and resilience of Black small business owners, creators and entrepreneurs.”

Ifill plans to use the money to expand its eight-person team and create more credit products to provide access to capital for entrepreneurs in rural areas. Also called banking deserts, these areas lack access to financial institutions, disproportionate impact the black community. As a result, Ifill hopes Guava will help black entrepreneurs access the financial support needed to weather all kinds of financial storms, especially as another recession looms.

“Traditional banks not only have served black communities poorly for decades, they have also failed to recognize the vast financial opportunities they have missed in doing so,” said Ifill. “Digital banks like Guava can help by providing broader access to basic services, networks and liquidity.”

Ifill began fundraising in March and said finding investors aligned with his company’s vision was paramount. One such backer was Tom Williams, Heron Rock’s general partner, whom she met through a mutual friend.

“[Kelly] is an incredible founder and the right person to lead the creation of not only a set of financial products, but, equally important, a community where black business owners can learn and grow together,” Williams said. at TechCrunch.

Lexi Reesean angel investor in the round, echoed those sentiments.

“This platform will allow every business leader to take full advantage of all the opportunities that entrepreneurship presents, from a level playing field,” Reese told TechCrunch.

Other participants in the round include Ruthless for Good Fund, Precursor Ventures, Backstage Capital and an angel investor Ed Zimmermanfounding partner of First Close Partners.

Ifill said the creation of Guava is a complete moment of service to the people she grew up with. She grew up in Brooklyn in what she calls an entrepreneurial West Indian home. His family ran many small businesses – his grandmother ran a cleaning business, his uncle and cousins ​​had a contracting business, and his aunt ran a landscaping business. Still, Ifill said she didn’t necessarily want to become an entrepreneur for the sake of the title; instead, she felt compelled to build something she’s passionate about.

Prior to launching Guava, Ifill worked as a strategic partner at Company Ventures and co-founded Seneca Network, where she helped Black and Latinx founders organize family and friend get-togethers. While there, she learned about the role of the racial wealth gap in causing minority founders to start out with less access to capital, which later drove her to want to eradicate this chasm.

“My inspiration came from wanting to honor the lived experiences of black entrepreneurs,” she said. “What we are building is an opportunity, a space for black entrepreneurs to have conversations that are intentionally built for them; to safely share their experiences. [That’s] quite unique.”

Correction: This article previously stated that this was a starting round; it was a pre-selection round.

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