Everyone wants to invest in what they think the next Microsoft of the 90’s is, but few have the money. But why should it be the case that the majority of investors are rich multi-millionaires? Why can’t YOU join the fun? Well with Aspiration, now you can. Aspiration relies on trust to help you with savings and investment options for the middle class, and replaces your financial advisor…with an app.
Today Andrei Cherny, cofounder and CEO of Aspiration, takes us through the recent process of their funding and shows us what a promising and “aspiring” company should look like.
Who were your investors and how much did you raise?
Our $15.5 million Series A was led by Renren with participation from GSV Capital, Capricorn Investment Group, Investor Group of Santa Barbara as well as leaders including David Bonderman, Gordon Crawford, Matthew Dowd, Rick Hess, Bill Lee, Joe Lonsdale, Alexis Maybank, Lenny Mendonca, Steven Rattner, Dan Rosensweig, Matthew Salzberg, Joseph Sanberg and Frank Yeary.
Tell us about your product or service.
Aspiration builds savings and investment products for the needs of middle class customers and delivers those products directly to our customers. Aspiration is replacing the financial advisor with our easy to use digital platform, narrative approach to education and product suite curated for the needs of the middle class.
What inspired you to start the company?
My Co-Founder Joseph Sanberg and I both grew up in middle class families in Southern California. During the first parts of our careers – he in the financial industry and I in the public sector – we saw first-hand how effectively the financial industry served a small number of Americans. We determined that there ought to be a financial firm just as dedicated to serving everyone.
How is it different?
Aspiration is different because we are focused on serving the middle class with products that are built for their lives and delivered on a platform of trust. We believe that in serving the middle class we can also make a difference for those who aren’t yet middle class. Aspiration donates 10% of the fees our customers choose to pay to our charitable partner Accion – the largest micro-lender in America.
What market you are targeting and how big is it?
Aspiration is targeting the approximately $20 trillion of liquid savings and investing assets that are controlled by the American middle class.
What’s your business model?
Aspiration earns revenue from the fees our customers choose to pay us for savings and investment products. Aspiration’s fee structure is called Pay What Is Fair. Our savings and investment products don’t have fixed fees. Instead, our customers are empowered to choose a fee they think is fair. Aspiration then donates 10% of that fee to charity through our partnership with Accion – the nation’s largest non-profit micro-lender.
What was the funding process like?
It was exciting. Investors recognize the once in a generation opportunity to redefine the financial industry with new trust-based brands delivered through digital platforms. We are grateful for the enthusiasm we received.
What are the biggest challenges that you faced while raising capital?
The biggest challenge is that raising capital is time consuming – and so is building a company! The company building process must go on during the raising capital process. As a result, there are just fewer hours available to sleep!
What factors about your business led your investors to write the check?
I think there were three primary factors: 1) Aspiration is attracting customers that incumbent financial firms haven’t been able to attract despite the near $17 billion annually that is spent advertising to them; 2) Aspiration is enjoy rapid customer growth, in part, through very high degrees of referral and virality. We are fortunate that our customers are very enthusiastic about Aspiration and tell their friends about us and 3) We have assembled an exceptional team of mission-driven professionals who have demonstrated an high level ability to innovate in a very regulated industry
What are the milestones you plan to achieve in the next six months?
Above all, we are focused on bringing Aspiration to as many new customers as possible so that more people can enjoy great financial products that they need from a firm they trust while also making a positive difference for others.
What advice can you offer companies in Los Angeles that do not have a fresh injection of capital in the bank?
Focus on deepening the areas of your company that truly make you unique. Those factors will ultimately be what compel investors to support you.
Where do you see the company going now over the near term?
We are growing the team to support our very fast customer growth