Blog 10: Zirtue
Simplifying loans between friends and family
Company: Zirtue is the world’s first relationship-based lending application, simplifying loans between friends, family, and trusted relationships by turning informal promises into structured agreements and automating the repayment process. Zirtue sits at the nexus between two major pain points: A person needing a financial lifeline to pay their bills and a company struggling with bad debt. Corporate partners use Zirtue as an alternative payment solution, allowing individuals with past-due accounts to request loans from friends or family members in order to pay their bills. Zirtue’s mission is to drive financial inclusion and freedom, one relationship at a time.
HQ Location & Year Founded: Dallas, 2018
Founder: Dennis Cail II, Co-founder and CEO, has expertise in building, scaling, and investing in financial technology (fintech) platforms with efficient business models and high-performing teams. Prior to founding Zirtue, Dennis worked in leading organizations such as PwC and IBM Global Services. A retired Navy systems engineer with top-secret clearance, Dennis received his bachelor’s degree in Computer Science and an MBA from Southern Methodist University (SMU).
Funds Raised and VC Investors: $6.5 million from Capital Factory, Google for Startups, Mastercard, Mercury Fund, Morgan Stanley, Multicultural Innovation Lab, Northwestern Mutual Future Ventures, Reinventure Capital Fund, Revolution, SixThirty Ventures, Techstars
Where did the idea for Zirtue originate?
I grew up in low-income housing in Monroe, Louisiana, where there were no banks or credit unions. If people needed cash quickly, they would have their checks cashed at the liquor store and would have to pay a 30% fee. Even as a kid, I knew that was bad math. Later, when I left the Navy, I witnessed predatory lenders, charging interest of as much as 400%, targeting minorities, people with low income, and military veterans. I decided I wanted to start chipping away at this issue to create more fair and equitable access to capital - ultimately driving financial inclusion.
What is the key problem that Zirtue intends to solve?
The primary alternative to payday lending for urgent cash needs is for friends and family to lend and borrow money from one another. Unfortunately, lenders often have limited success in getting repaid, which can create awkwardness and put stress on these important relationships. Zirtue was designed to bake transparency and accountability into the lending and repayment process between friends and family. Our business model is driven by the mission to build financial inclusion one relationship at a time by formalizing and simplifying loans.
How are you most differentiated as a service?
We like to think of ourselves as a financial conduit between relationships and businesses. With Zirtue, borrowers don’t have to pay 400% interest rate and lenders can feel good about providing capital in a more transparent way. Zirtue creates a digital paper trail of loans, including a promissory note. We link a user’s bank and debit card to their profile where users can schedule automatic monthly drafts. We take responsibility for sending nudges and reminders for users to add new payment methods when needed. Additionally, accountability is baked into the product through our bill pay transparency where lenders can also see if their funds are being used for their intended purposes. Borrowers have the option to pay specific creditors directly from our growing partner list which includes; Reliant Energy, AT&T, and several other corporate partners including healthcare providers and utility services. This way, our enterprise creditor customers are better able to capture at-risk dollars and create a better customer experience. The last thing they want to do is send a customer into collections or discontinue their services. It’s our role to give lenders more ways to say “yes” to friends and family.
What are the company’s key accomplishments to date?
Over 300,000 people have used our platform and Zirtue processed over $30 million in loans last year, which was three times more than the year before. We project reaching $200 million in loans this year and our user base continues to grow daily. Our application is entirely free for both lenders and borrowers and our revenue is driven through our partnerships with enterprise customers.
What lies ahead in the product plans for Zirtue?
Americans lend and borrow over $200 billion per year, a rate that is growing 30% annually. As this number grows, we’ll continue to build services that help friends and family make transactions with one another more simply that ultimately drive financial inclusion. Later this year, we plan to introduce the option for users to report to credit bureaus to help them establish or repair their credit. We will also be launching a partnership that will power loans for customers of a major financial services company, among many other upcoming corporate partnerships. We’re thrilled to continue supporting our enterprise partners and look forward to paving the path towards financial inclusion.
What are the long-term strategic growth objectives?
Everything we do at Zirtue centers around the following: How can we give people a better hand up versus a handout? Our goal is to become the world’ go-to solution for loans between friends and families - giving them a method to set their own terms with each other where they are more inclined to pay each other. We are investing in behavioral science and, at critical mass, envision Zirtue becoming its own index to determine market health. The data we are capturing is unique and will help us bring equality and transparency to access of capital for an underserved base of the population.
Ron’s Take
There are some messy problems that well-established institutions simply won’t touch. Lending between family and friends is one of those. And yet these loans represent both a massive addressable market and one riddled with challenges. Zirtue takes much of the agony, awkwardness, and unease out of the process. In fact, the elegance of the solution is that it solves multiple problems in one, including bill payment and the ability to help people get their credit back on a stronger footing. From his own lived experience, Dennis can champion the solution to its target market of families who are low-income and frequently living paycheck-to-paycheck. Like the marketplace app offered by SoLo Funds, which was profiled in this blog several weeks ago, peer-to-peer lending is moving into a new age that will solve significant burdens faced by individuals who struggle to access capital in times of need.