Blog 29: Altro
Giving credit where credit is due
Company: Altro (formerly known as Perch Credit) operates an online credit building platform designed to help users convert their subscription payments into credit history. The company's platform allows members to link their recurring payments such as rent and subscription payments to leverage unseen and uncounted payments to build their credit score, enabling individuals to upscale their credit scores.
HQ Location & Year Founded: Los Angeles, 2019
Founder: Michael Broughton is a social entrepreneur who is on a mission to break down barriers for the unbanked and those who lack credit. In addition to founding Altro (originally Perch) in 2019, Michael is Vice Chairman of the USC Credit Union (where, at 19, he was its youngest ever Board member) and has been both a Thiel Fellow and a Sequoia Scout. He started Altro as a student at the University of Southern California.
Funds Raised and VC Investors: $18 million from Alumni Ventures, Backstage Capital, Black Capital, Citi Impact Fund (Citigroup Alternative Investments), Concrete Rose Capital, General Catalyst, Incite Ventures, Kapor Capital, Lombardstreet Ventures, Marcy Venture Partners, Paypal Holdings, Pendulum Holdings, Riverside Ventures, Sequoia Capital, Softbank Opportunity Fund, Think +, Underdog Labs, VentureSouq, Village Capital, Wonder Ventures, Y Combinator
Where did the idea for Altro originate?
The idea started when I was entering college. I came from a family of nine people in one household on a single income. I was the first in my family to apply to a big institution like USC. I was fortunate enough to be accepted, but I couldn’t come up with the tuition. I was $10,000 short. This led me to a situation where I couldn't start classes until I could figure this out. I applied to private college student loan programs, but I was denied because I did not have personal financial credit. Our family finances didn’t add up to what the lenders were looking for. I eventually figured it out by calling the university everyday. However, I see the lack of accessibility that people like me face. I was thinking about what actionable steps I could take to help solve this. By my junior year at USC, I figured out what entrepreneurship was and began to think about how to solve this problem.
What is the key problem that Altro intends to solve?
It is a pretty clear problem. At least 68 million Americans reportedly lack access to a first financial product. They are stuck in a chicken and egg situation where they can’t get credit without having a financial product (such as a bank account or credit card) and they can’t get any product without having any credit. With Altro, we are simply working to lower this number. We want to show that there are more genuine creditworthy consumers in the market.
How are you most differentiated as a service?
Our platform is called Altro which means “other” in French and we are providing equitable access to credit for those who are being overlooked by the current system. We take things as simple as subscription payments to Netflix to help inform credit decisions. If consumers are paying this bill each month, they should be able to add to their credit lines. We help tie tradelines to one’s Social Security number. This helps to both create and strengthen credit profiles. Two things came together for us to make this work: Covid pushing the agenda for subscription services, and now being the first time that Wall Street and Capitol Hill are both lining up on the cause for equitable access. Wall Street wants to reach new customers and Capitol Hill wants to fix the problem of access. We came in at the right time.
What are the company’s key accomplishments to date?
We had a great year last year. Our app went viral under the original name, Perch Credit. Hundreds of videos have been recorded of people talking about it. We’ve had great community-led PR. We were Top 10 in the app store for more than a month. We then took a pause as we recognized this opportunity was greater than the six of us at USC could manage. We are now up to 40 people. We have reset and rebuilt the app and have now rebranded and are in the market with true market fit. We have had 350,000 downloads to date.
What lies ahead in the plans for Altro?
There are still a lot of serious gaps in the credit agency model. People are scored on a 0-100 scale. Many consumers are between 40-70, who don’t have a great score and need to work on it. A lot of financial products are available once you get past 60, such as credit cards, mortgages, etc. However, you don’t see a lot offered to people who fall in the 0-40 range. We want to focus there. A lot of people can’t get their first bank account. Big gaps exist for people who need that first product in order to set themselves up on a strong financial footing.
Ron’s Take
Almost anyone would agree that the credit scoring system that lenders and financial services firms rely on is imperfect. However, for many people, it is downright broken and cruel, and there is little that individual consumers can do about it. A radical rethink is needed, particularly for those who are most financially vulnerable. Altro is bringing in new data points, through everyday consumer purchases, to help people establish and improve their credit. This will solve countless problems for millions of individuals, while also opening opportunities for businesses to work with consumers that had been neglected and cast aside for far too long.
Disclaimer: Alumni Ventures invested in the Series A round of Altro in early 2022.