Blog 18: Propel
The mobile financial platform for low-income Americans
Company: Propel offers a mobile finance platform designed for low-income Americans to manage government benefits and debits side-by-side. The company's platform features the ability to instantly view food stamps, locate grocery stores, corner stores, and farmer markets nearby as well as keep track of spending, enabling individuals with low income to improve their financial health, save money, find jobs, and earn income.
HQ Location & Year Founded: New York, 2014
Founder: Jimmy Chen founded and has served as CEO of Propel since 2014, having been compelled by a desire to bring technology to an important, overlooked segment of the population. Prior to this, Jimmy was a Product Manager at both LinkedIn and Facebook, as well as an intern at Yahoo and the World Bank. Jimmy is a graduate of Stanford University with a degree in Symbolic Systems.
Funds Raised and VC Investors: $90 million from Andreessen Horowitz, CLF Partners, Financial Solutions Lab, Financial Venture Studio, Flourish Ventures, Inspired Capital, JP Morgan Chase, Kleiner Perkins, Nyca Partners, Salesforce Ventures, SciFi VC, Serena Ventures, Thirtyfive Ventures
Where did the idea for Propel originate?
I started Propel eight years ago through Blue Ridge Labs, which is part of the Robin Hood Foundation. I witnessed many of the challenges faced by low-income Americans. I was previously a Product Manager at Facebook and LinkedIn. I felt there was a better way for low-income people to navigate government benefits, which can often be bureaucratic and overly burdensome. I came to the United States from China at age four with my parents. I had a happy childhood, but money was always tight. My parents worked in restaurants and did odd jobs.
When I got to Stanford for college, I realized that there were people who came from very different financial backgrounds than I did. I got into coding, but one thing I realized early in my software career is that people tend to solve problems that they understand. Entrepreneurs and folks in venture capital tend to disproportionately come from wealth. To me, not focusing on problems of lower income people was a huge, missed opportunity. In 2022, most people, including many of lower income, have smart phones and access to the Internet. Yet people in Silicon Valley are generally building apps for 25-year-old software engineers at Google. Not that many people are building software for single moms on food stamps in Kansas City.
What is the key problem that Propel intends to solve?
The concept for Propel is how to take what has been learned from top tier tech companies like Facebook and apply this to the daily challenges of people living in poverty. In the summer of 2014, I spent most of my time talking to people in low-income households to gain insight into the challenges that they face, while thinking about those challenges that technology has the power to solve. I started to learn about the social safety net. The food stamp program is used by 40 million Americans (one in eight residents). Benefits are provided via Electronic Benefits Transfer (EBT) debit cards that are issued by state. However, the benefit recipient must call a 1-800-number on the back of the card just to find out what their balance is. Why isn’t there a mobile banking app for this? I broadened this thinking into what else fintech can help solve. We set out to make a product available to Americans in extreme financial need by building the country’s first mobile banking app for the EBT card. Initially this was a free app that showed balance and transaction history. We launched in early 2016 and got a lot of traction. For our customers, the experience should be no different than any other credit or debit card customer.
How are you most differentiated as a service?
We grew the user base rapidly through the first offering. As we talked to our customers we learned a lot about them. Government benefits are just one slice of their life. “Food stamps” are not a category or label for people. We wanted to address how to combine services that would help people make it through the month and therefore we extended to other offerings. We focus on how to help someone who is managing a family of four while earning a maximum of $28,000 per year.
We now serve five million monthly active users and are the most popular financial service product used by low-income Americans. We are extending into other services. Our debit card is built for customers who are earning under $40,000 per year and earning a government benefit. We help people to save money through household finance. We have partnerships with different retailers, both online and brick and mortar, through coupons. We work with utilities and telcos like Comcast and T-Mobile. We also help users to earn more money by finding different types of work, both part and full-time. Last year over 300k people applied for jobs through us. Our customers define themselves as providers for families. Our aim is to help empower them to be good providers and provide services that they need.
What are the company’s key accomplishments to date?
Our average monthly active user opens our app 17 times per month. Our grocery coupons have saved our customers more than $60 million.
We conducted a study with Harvard Business School several years ago to find out how people used food stamps both before and with our app. With us, people were able to stretch their food stamps benefit by one day per month. That means an extra day of food per month for a low-income family that comes from average benefits of $250 per month. We help them to set a budget in a digital way that is convenient and modern. People can naturally set a budget that’s more conducive to what they want.
In addition to this, we did a project with the GiveDirectly team to enable philanthropic contributions directly to our users. This was simply about raising money for direct cash payments to low-income Americans with us as the distribution channel. This was highly publicized, and we were able to serve $180 million through 180,000 cash grants. We believe this was the largest private cash transfer in American history. It’s a simple way to send money to people in need with no cost or fees.
What lies ahead in the product plans for Propel?
We plan to grow our digital banking product. Benefits aren’t the entirety of our users’ financial life. We plan to sit at the interaction of benefits and money by offering the opportunity for users to get income, including government benefits, which can be difficult to navigate and fully utilize. We are helping users get cash benefits that they probably qualify for but may not be able to access. We will become the core banking provider for low-income Americans.
What are the long-term strategic growth objectives?
We aim to become an institution like AARP but for low-income Americans. We will offer a platform with membership. We see AARP as a blueprint for what we can be with products tailored to this demographic and their multifaceted financial lives.
Ron’s Take
While it has been more than 15 years since the late Professor C.K. Prahalad published The Fortune at the Bottom of the Pyramid, it is remarkable how few technology entrepreneurs have sought this market out by trying to truly understand the problems among those families and individuals who are at the lowest income rung of the ladder. This is precisely where Jimmy Chen received his motivation for building Propel into a platform leading in offering financial services and a community to support needs that many tech founders simply don’t understand from not having had such a lived experience. The opportunity to solve problems are immense and Propel, along with their backers, are well positioned to remain at the forefront of truly impactful product development.