Zirtue, a Dallas-based fintech startup behind the first and only relationship-based lending app, has received an undisclosed investment from Northwestern Mutual Future Ventures, the corporate venture capital fund of industry titan Northwestern Mutual.
The funding is an addition to Zirtue’s seed round, bringing the total raise to $4 million. The funding will go toward hiring new talent and adding product offerings, according to a news release.
Zirtue offers a peer-to-peer lending platform with a twist: Unlike common options often used for friend and family lending, like Venmo or PayPal, Zirtue adds a layer of accountability to the loan process. Co-founder and CEO Dennis Cail aims to drive financial inclusion, one relationship at a time.
The story goes that Cail founded Zirtue to solve a problem he experienced growing up. He saw that traditional banks were often not located in certain neighborhoods, leaving locals vulnerable to predatory payday lenders and risky check cashing services.
His solution was to create a loan option for unbanked and underbanked individuals, giving them more freedom and empowerment throughout the loan process.
“Friends and family are among the largest banks in the world, loaning $184 billion annually to loved ones,” Cail said in a statement. “Loaning money can damage relationships, and Zirtue is the modern day solution by providing a seamless, structured way for people to be paid back, while taking the awkwardness out of those conversations and transactions.”
Zirtue’s service enables a more formal payment process for both the lender and the borrower. A recent survey showed that one in three people in the U.S. will borrow money from someone they know. The average loan, according to the report, is $3,300.
Rather than taking on debt through a high-interest credit card or an even more onerous payday loan, the platform provides the lender with a higher level of trust that he or she will be repaid.
It’s also an alternative to simply giving a friend or family member a loan on a handshake or makeshift contract. Zirtue gives users repayment terms, a digital promissory note, and automatic bank drafts.
On the corporate end, partners can use Zirtue as an alternative payment solution. This allows individuals with past-due accounts—and in need of a financial lifeline to pay their bills—to request loans from friends or family members.
As of January 2020, more than $10 million in loans had been processed on the three-year-old Zirtue platform.
Northwestern Mutual got involved to help usher in “the future of inclusive financial technologies.” The more than 160-year-old financial services giant said its investment represents a commitment to accelerating financial technology startups that are focused on historically underbanked and underfunded populations.
And, its efforts to invest in Black-founded companies. Northwestern Mutual Future Ventures has so far dedicated $40 million to investing in women and Black entrepreneurs.
“Zirtue is leveraging technology to provide a unique offering and tapping into a market that is often underserved in the financial services industry,” Craig Schedler, managing director of Northwestern Mutual Future Ventures, said in a statement. “Zirtue aligns with Northwestern Mutual’s commitment to providing financial inclusion and their recent growth demonstrates the unmet need for this type of lending platform. We look forward to partnering with Zirtue and continuing to advance and grow the company.”
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