Financially, the world has been fragmented by geography. With the invention of cryptocurrency and an influx of tech products, we're beginning to see that change. As part of the She's Next Conversation Series, empowered by Visa, we connected with female entrepreneurs who are propelling innovation to develop new systems and financial tools that remove traditional barriers to financial empowerment -- even for those with no credit at all.
One of these women is Flori Marquez, founder of BlockFi, who made a transition from traditional Fintech at Bond into the ecosystem of crypto lending. At a high-level, she shared the company's evolution, "BlockFi tries to build a bridge between traditional finance and crypto. Our first product was a U.S. dollar-backed loan by crypto, so if you owned a lot of Bitcoin you could access liquidity without selling. Over the last four years, we expanded that business model, and now offer interest accounts where you can earn up to eight percent on stable coins."
For those less familiar, Bitcoin is a decentralized digital currency (cryptocurrency) that you can buy, sell and exchange directly without an intermediary like a bank. Stable coins are a type of cryptocurrency whose value is tied to an outside asset, such as the U.S. dollar or gold, to stabilize the price.
Flori continued at rapid speed, "We offer the ability to trade...we take in crypto assets from retail users, and we also turn cash into stable coin, and then we lend those assets out to institutional investors who pay us a yield to borrow those assets, which we then flow back to our retail users in the form of an interest payment."
The biggest challenge she faced three and a half years ago were traditional investors were not interested in the riskiness of crypto assets. Today, "it's growing like nothing I ever imagined. Before COVID, we had 80 employees. Today we have over 600 with $15 billion in assets on the platform and over 300,000 users."
Terry Angelos, Visa, senior vice president, global head, Fintech, Visa, who moderated the conversation was quick to add, "BlockFi recently raised another $350 million at a $3 billion dollar valuation."
In Silicon Valley, one of the most challenging parts of running a company is finding and retaining the right talent. It's super-competitive and big companies have the financial resources to pay up, making it harder for small startups. Cynthia Chen, founder of Kikoff, found a way to attract talent: "Inspire with mission." She and her co-founder built Kikoff to help millions of underserved Americans who otherwise wouldn't have easy and affordable access to credit products.
"We knew it would be difficult for someone who isn't affluent to build credit and those are the people who need credit the most. We share our founders' story [of coming from low-to-moderate income families] when recruiting, and it has resonated."
Cynthia, a serial entrepreneur with three unicorns (including Figr) under her belt, said another method she uses to empower employees is to make a difference, to do something that is impactful. "At a small company, everyone can be anything, even if you're an engineer, you can still be a growth hacker, you can share ideas to influence the customer experience. That doesn't usually happen at the big companies where you have a very defined scope of work. Team members are joining us because they want to be entrepreneurs, it's a very good training camp for them."
This is terrific advice for anyone starting a company: Mission trumps everything else.
So, how does the Kikoff loan work? "We entered the market offering a microloan of $12. Users received a zero interest, zero fee loan to pay back during a twelve-month period. It was a beta product that did very well. We upgraded to a more traditional product line, a $500 line of credit (zero interest, zero fee) that consumers can use to shop at the Kikoff store. Once they've made their final payment on the credit line, we report their payment history to credit bureaus. So basically, consumers are building credit for free."
Flori highlighted the shift in our society to one of inclusion and diversity. "Historically in finance, whoever is running that company had an inherent bias -- you build for what you know. It was primarily represented by one demographic." Products that promote inclusivity make it easier for demographics that were traditionally excluded from financial products. "With BlockFi, it's one price for all, regardless of what country you're from." Flori, whose family is from Argentina, has had the ability to influence that decision because of her background. "30 percent of our clients are non-U.S, and this is without active marketing outside the U.S. It speaks to the needs of countries like Argentina and Peru. They find us and convert themselves. This is the first time in history you can send assets internationally without a partner bank, it's relatively seamless."
Brynly Llyr, general counsel at CLabs, a blockchain technology company, is at the forefront of where this innovation is going and what laws apply. She has been active in the crypto world since 2016, with roles at eBay, PayPal, and Ripple. Brynly acknowledged what keeps some investors at bay. "There is still much to be improved...part of what kept it on the fringe is that it has been associated with illegal activity. We now have better technology that can give us better visibility. If we go back 50 years, why did we even have bank secrecy acts? We didn't have visibility into banks, and we were concerned with folks going to open Swiss bank accounts and avoiding taxation. That's the genesis of the system we use today."
She continued, "With open technologies, we can see transactions across Blockchain, we are starting from a different place and that is with much more visibility. If we think about where we want to go--better, trusted, compliant, less expensive systems for more people in the world, we're getting there. The current financial system excludes as many as 1.7 billion adults annually, and this is a way to open it. This is also an opportunity to monitor behavior we don't want to see, like money laundering."
Speaking of her partnership with the Visa Fast Track Program, Flori shared, "We're launching a credit card where you earn Bitcoin as a reward, and Visa was the only partner I wanted because they move at the speed of light and were ready for a fast launch. Crypto can be scary for some...and maybe you don't want to put your cash into buying Bitcoin for the first time, but what if I told you, you could give up airline miles and instead earn Bitcoin as a reward?" Terry added there is currently a wait list for these cards, so it's something that has definitely struck a chord with consumers.
As another vested partner in the Visa Fast Track Program, Kikoff is launching a debit card with Visa, attached to a deposit account that will help customers monitor their budget and plan, so they can progress towards their goal of home ownership.
Flori wound up the session on an inspiring note, showing how women in crypto are helping people who have traditionally been excluded and making their assets work for them. Cynthia hopes to help Americans who were affected by the pandemic recover and establish credit. Brynly is excited about the opportunity for many innovators from all over the world to find a way to use Blockchain technology to invest in natural resources, preserving forest and clean water.
We look forward to watching these women continue to disrupt the Fintech space. View the full session here.
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