Despite the fact that more than half of U.S. households struggle with their financial health, fintech founders and those who invest in them reflect a homogenous world. While specific numbers for diversity in fintech are difficult to nail down, we know that all-women teams of entrepreneurs received just 2 percent of all investment by venture capitalists in 2017 and only an estimated 3 percent of the venture capitalist workforce is black while only 4 percent is Hispanic or Latino.
At the Financial Solutions Lab, managed by the Financial Health Network with founding partner JPMorgan Chase, we believe this dichotomy stifles the potential of innovation and created a program to support a more robust market of creative, affordable, and high-quality products that help all people in America improve their financial health.
Since 2016, we’ve been reflecting on the Financial Solutions Lab’s role in supporting more diversity in fintech and have continued to evolve our thinking and expand our efforts. In this blog post, we share some specific examples from this past year.
Building a diverse pipeline
For the recruitment and selection of the Financial Solutions Lab’s fourth cohort, we focused on expanding the Financial Solutions Lab’s digital and physical footprint over previous years by:
• Expanding our network of amplifiers to help promote our call for applicants with their networks, including historically black colleges and universities, geographically-focused innovation hubs and mission-aligned accelerators.
• Co-hosted a small, topic driven dinner with a diverse group of guests (including those outside of fintech) and Financial Solutions Lab alum Jerry Nemorin of LendStreet.
• Traveled to more than 30 cities over 10 weeks, including events with the TechTown Fintech Challenge in Detroit, ATDC (the state of Georgia’s incubator at Georgia Tech), and the Aging into the Future conference in Los Angeles. We also hosted events in Chicago, Washington, D.C. and Boston.
“I had to learn about sound financial management on the fly and later in life. Because kids with saving accounts in their names are six times more likely to go to college, Goalsetter can teach them about financial planning at an early age and set them on a path towards a brighter future.”
—Goalsetter founder Tanya Van Court, who was raised by a single mother and remembers knowing a lot about hard work, but not a lot about how to manage money.
Diversity Among the 2018 Financial Solutions Lab Applicant Pool
The 2018 application cycle garnered a total of 311 applications, representing 34 states and a wide range of solutions to improve consumer financial health. This year, we specifically asked applicants to share in their application how they intend to serve a broad, diverse customer base.
While we don’t collect data on gender, race, or ethnicity, we estimate that 36% of applicants had at least one female founder. Additionally, for the third year in a row, we asked applicants to complete a voluntary survey on the diversity of their teams. A summary of those results as well as additional data and insights from across our 2018 applicant pool can be found in our fourth annual Snapshot report.
“The Sixup team shares the DNA of the students we serve. We grew up in single-parent, low-income families. We were immigrants and the first in our families to go to college. We had no options but to hack our own financing and mobility within a system biased against us. We built Sixup to level the playing field for the next generation, so we can scale and lift undervalued, deserving human capital into education, workforce, and upward mobility.”
—Sixup founder Sunwoo Hwang
By candidly sharing our efforts to build a more robust and representative fintech ecosystem, we aim to hold ourselves accountable, to identify areas where we need to continue to make stronger progress, and to hopefully inspire you to join us in taking stronger action to create a more inclusive industry.