Fintech Guava raises $2.4M to provide banking services to Black small-business owners
Guava, a banking and networking platform targeting Black entrepreneurs, announced today the closing of a $2.4 million pre-seed round led by Heron Rock.
Founded last year by Kelly Ifill, the company aims to narrow the racial wealth gap by providing financial services to Black small businesses and creators. The digital banking platform — set to launch early next year officially — allows entrepreneurs to check expenses, budget, transfer money, track growth and connect with other entrepreneurs looking to scale their businesses.
Ifill said fostering a safe community for Black founders is a personal passion, noting that small businesses are the “backbone” of the U.S. economy. She said entrepreneurship could be an economic and social equalizer if Black people received 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 specifically — were the fastest growing cohort of entrepreneurs. And yet, Black founders receive less than 2% of all venture capital funding, and only 3% of Black women run mature businesses. During the pandemic, more than 40% of Black businesses shuttered, compared with 17% of white-owned businesses; furthermore, the cohort was disproportionately unable to secure Paycheck Protection Program loans to keep their businesses afloat.
“Black folks had to be entrepreneurs, we had to build businesses to support our families, but because of racism, we were excluded from 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 her team of eight and build more credit products to provide access to capital for entrepreneurs in rural areas. Also known as banking deserts, these areas lack access to financial institutions, disproportionately impacting the Black community. As a result, Ifill hopes Guava will help Black entrepreneurs receive access to the financial support needed to weather every kind of financial storm, especially as another recession looms.
"Not only have legacy banks underserved Black communities for decades, but they also failed to recognize the vast financial opportunities they missed by doing so,” Ifill said. “Digital banks like Guava can help by providing broader access to core services, networks and liquidity."
Ifill started fundraising in March and said finding investors aligned with her company’s vision was paramount. One of those funders happened to be Tom Williams, the general partner of Heron Rock, whom she met via a mutual friend.
“[Kelly] is an incredible founder and the right person to lead in creating not just a set of financial products but, just as importantly, a community in which Black business owners can learn and grow together,” Williams told TechCrunch.
Lexi Reese, an angel investor in the round, echoed those sentiments.
“This platform will enable every business leader to take full advantage of all the opportunities that entrepreneurship offers, starting from a level playing field,” Reese told TechCrunch.
Additional participants in the round include Ruthless for Good Fund, Precursor Ventures, Backstage Capital and angel investor Ed Zimmerman, a founding partner at First Close Partners.
Ifill said the creation of Guava is a full-circle moment in servicing the people she grew up around. She was raised in Brooklyn in what she calls an entrepreneurial Caribbean household. Her family helmed many small businesses -- her grandmother ran a cleaning business, her uncle and cousins had a contracting company, and her aunt operated a landscaping enterprise. Still, Ifill said she didn’t necessarily want to become an entrepreneur for the title's sake; instead, she felt compelled to build something she's passionate about.
Before starting Guava, Ifill worked as a strategic partner at Company Ventures and co-founded Seneca Network, where she helped Black and Latinx founders raise family and friend rounds. At the latter, she learned about the racial wealth gap’s role in causing minority founders to start with less access to capital, which subsequently sent her toward wanting to eradicate this chasm.
“My inspiration came from wanting to honor the lived experiences of Black entrepreneurs," she said. "What we're building is an opportunity, a space for Black entrepreneurs to have conversations that are intentionally built for them; to share safely with each other about their experiences. [That's] pretty unique."
Correction: This article previously stated this was a seed round; it was a pre-seed round.