More than 100 million Americans spend an average of USD 1,100 (over USD 1.4 trillion per year) on their largest monthly household spend: rent. But reports say 90% of these people don’t get credit for paying their rent on time. On a sub-level, over 45 million people in the US don’t have credit scores, according to a 2020 report by the Consumer Financial Protection Bureau. Most of this demography are financially marginalised due to their background and race, TechCrunch reports.
The investment gives four-year-old Esusu a valuation of USD 1 billion, placing it as one of the very few black-owned unicorns in the US and globally, reportedly. SoftBank Vision Fund 2 led the funding round, with participation from Jones Feliciano Family Office, Lauder Zinterhofer Family Office, Schusterman Foundation, SoftBank Opportunity Fund, Related Companies, and Wilshire Lane Capital.
Immigrants and African Americans have lower or non-existent credit scores than other populations. To a large extent, they also witness more predatory lending, putting them in a cycle of financial insecurity. So, while they need strong credit scores to build wealth, they do not have access to build credit.
The New York-headquartered fintech partners with property owners and housing providers and works with 35% of the largest landlords on the National Multifamily Housing Council (NHMC) list. Its partners include Goldman Sachs, Related Companies, Starwood Capital Group, and Winn Residential.
Esusu captures on-time rental payment data of renters who opt-in to its platform and reports to the three major credit bureaus–Equifax, TransUnion, and Experian–to strengthen their credit scores. This way, renters can work their way to better credit scores over time while Esusu helps property owners mitigate against initiating evictions.
Esusu charges property managers and owners a USD 3,500 set-up fee and USD 2 per unit monthly. Renters, on the other hand, pay an annual subscription fee of USD 50 to report their rental payment data to credit bureaus.
The founders told TechCrunch that Esusu has a 600% year-over-year growth rate. Over 2.5 million homes currently use its service, representing over USD 3 billion in Gross Lease Volume (GLV) across the US, up from 2 million homes and more than USD 2.4 billion in Gross Lease Value the company reported six months ago.
In April 2020, Esusu launched a rent relief fund after carrying out a survey on its platform that showed that 62% of its users would not be able to pay their rent on time due to the pandemic’s effects. The company raised almost USD 500,000 via crowdfunding and nonprofit impact investment funds.
Two years on, that programme still runs and Esusu has scaled it to keep thousands of renters in their homes. The programme has garnered partners with more than USD 1.7 billion on their balance sheet, Esusu founders told TechCrunch.
Esusu plans to use the funding to scale its team, invest in product innovation, and improve its financial health platform.
Motley Fool Ventures, the lead investor from its USD 10 million Series A round in July 2021, re-invested in this new financing round. Other existing investors Concrete Rose Capital, The Equity Alliance, Impact America Fund, Next Play Ventures, Serena Ventures, Sinai Ventures, and TypeOne Ventures, doubled down too. In total, Esusu has raised over USD 144 million.
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