Esusu, a fintech startup helping individuals save money and build credit, has raised $1.6 million to scale, expand market share, and focus on product development.
Inspired by the Yoruba people of Nigeria, where the co-founder and CTO come from, Esusu will use the new funds to enhance its rent reporting platform, onboard new partnerships, and extend overall reach. The firm also aims to grow the team – hiring in key leadership roles across sales, technology, and operations.
The seed round was led by Acumen Fund with participation from Sinai Ventures, Kleiner Perkins, Katapult Accelerator, Plug and Play Tech Center, Global Good Fund, Temerity Capital Partners, and prominent angel investors.
“As impact investors focused on improving the financial health of all Americans, we look for entrepreneurs who are tackling frictions in the financial services industry that are adversely affecting both sides of the market. We’re excited by Esusu and the vision of co-founders Samir and Abbey to build better tools for traditional financial services industry players. Esusu serves lower-income and historically credit-challenged consumers, while simultaneously empowering these consumers with credit-building tools that can transform their access to wealth-building – rather than predatory products and services,” said Eliza Golden, Portfolio Manager of Acumen.
Esusu was co-founded by Abbey Wemimo and Samir Goel alongside founding team members Albert Owusu-Asare (CTO) and Robert Henning (CFO).
According to Abbey Wemimo, Co-Founder and Co-CEO of Esusu,“With the support of our strategic investors and partners, Esusu is poised for unprecedented growth and ready to scale to serve the millions of Americans struggling to save and create a financial identity.”
Starting in the US, where there are 45 million people without a credit score; Esusu aims to help them get a score, build their credit profiles and aims to unlock over $3.1 trillion in untapped capital.
Esusu also has a peer-to-peer savings app and Esusu Rent, its signature rent reporting platform to give renters credit for making monthly payments, a benefit historically reserved for homeowners.
“Esusu is growing swiftly to meet the demand for our rent reporting platform, and our nonprofit and corporate partnerships are essential to scaling while continuing to ensure safe and friction-free customer experience,” said Samir Goel, Co-Founder and Co-CEO of Esusu. “Our technology is capturing financial information that has never been recorded to equalize the playing field and increase access to capital and credit for millions that have been underserved by the financial system.”
According to a paper by Evans Osabuohien and Oluyomi Ola-David, Esusu is an African traditional form of cooperation where individuals come together to save for their mutual benefit. Esusu was mostly practiced by farmers among the Yoruba people of Nigeria then spread to other parts of Africa including Liberia, the Democratic Republic of Congo, and other West African countries.
These practises were not limited to Africa. Esusu practices are found in the Caribbean Islands. Among the Yorubas, esusu cooperatives allow people to to contribute a fixed and equal sum of money at intervals says daily, weekly, fortnightly, monthly or bi-monthly then allow each member to benefit from the pool then start a new rotation.
In urban areas, the Yorubas distinguish between esusu and ajo. In ajo, a professional collector, the alajo, goes round to collect contributions, usually on a daily or weekly basis, and is paid a small commission for this service. This is more personal than the formal financial system, since no-one needs to go to the bank to make a deposit. At the same time, it is less personal than esusu associations, since ajo contributors do not necessarily know the other contributors. Rather, their relations are mediated by the alajo, who keeps a record of contributions. Each contributor must make regular contributions within a given period, but is at liberty to contribute according to their budget. In certain circumstances, such as an emergency, a contributor may ask the alajo to return a certain amount of their contribution; this is what distinguishes ajo from esusu. In some cases, the alajo has a bank account, in which he or she deposits the funds until the end of the collection cycle, at which point the money must be paid to the chosen contributor. The decision on how and when the contributor gets the money from the alajo is mutually agreed between the two of them. For instance, if the contributor contributes daily (which is popular among traders and small business owners) and the contribution ‘matures’ at the end of the month, the alajo will, after subtracting his or her fee (usually equivalent to one of the rounds of the total contribution) returns the rest of the contribution to the contributor.
Esusu operates outside the formal legal and financial systems and tends to function solely on an oath of allegiance and mutual trust. This ensures that members of the association who have collected their funds early do not pull out of the system, causing other members to lose some or all of their contributions. As for ajo, the credibility of the alajo plays the key role in preventing risk and ensuring continued patronage.
Esusu is still popular in Nigeria despite the establishment of formal microfinance institutions. Esusu is mostly used by workers of the informal sector, market places, rural and urban communities and religious groups. It is most popular among low- and middle-income earners and rural folks whose low pay limits them from accessing mainstream financial services offered by banks. Esusu, is loved because it tailors its financial services to the real, day-to-day needs of each member of the group and saving is more convenient and personal. Credit is also less costly than it would be in say a bank or microfinance institution.
Most of the time, Esusu members, who are mostly rural, poor women, enjoy interest-free loans and savings.
Esusu has a huge impact on communities who are exclused from formal financial services such as banks and modern cooperatives. it also helps in poverty alleviation, increases in uptake of micro-financing and savings mobilisation in Nigeria.