was to find companies in so-called “banking desserts " and offer them financial services.
Sheen Alen wrote in a LinkedIn post “I am proud of the work we were able to accomplish, but honestly disappointed that we couldn’t complete the mission,” she wrote. “I feel strongly that there is still much work to be done in the financial inclusion space, so it won’t be the last you hear of me in regard to fighting for economic equality”.
Even more so, in an interview for TechCrunch, Sheen Alen said that the company has been experiencing a downfall ever since last year, and they have been waiting to announce it after a possible acquisition occurred.
The services they provided for the “banking deserts” were for people in restricted areas, more often in rural communities, which often had no nearby bank breach in order to receive a checking account. The “banking dessert” terminology, also applies to people who have a difficult time going to a physical bank such as disabled, lower-income, or elderly.
The company, CapWay, was founded in 2016 as a result of the absence of banks in some communities. The absence of banks led to high-interest payday loans and high-fee cash services, as seen in a CNN report.
So, CapWay's plan was to help address this matter and reach the population that needed financial literacy by offering them online banking alternatives. And, according to Pitchbook, the company obtained from investors like Backstage Capital, Fearless Fund, or Khosla Ventures over $800,000 in funding.
Even more so, Allen reported that there also were a few reasons why the company needed to be closed down. She talked about how the fintech industry shifted after the hacking of Evolve Bank&Trust, another reason for the closing being the collapse of Synapse where millions of dollars from customer funds ended up frozen.
After those incidents, every bank looking to collaborate with fintech required them to have a certain amount of money in the bank. “It takes money to play in a highly regulated industry because you can’t control the changes,” she said. “You just have to have enough money and time to survive the adjustments.”
During this time CapWay needed to find a new banking partner while still raising more money as they needed to meet the potential partner's new “money on hand” policy. In this period of time, investors starting to turn their back on her, letting CapWay struggle.
She also talked about the challenge of Black founders saying “Fundraising itself was down for everyone, but it was and is extremely down for Black founders,”. Also said that she felt like she felt like there was a competition with other Black-founded fintechs.
Some investors like to group all Black fintech companies into one box, [even] when we don’t all do or operate the same or have the same target audience,” she reported for TechCrunch “It’s unfortunate, but that was a factor in us being told no a few times.”.
However, the closing of her startup will not let Allen down, still looking for new opportunities of growth ”It’s a rough time to wind down your company,” and. “But I’ve learned there’s beauty in the journey even on cloudy days when things seem dark.” she said.
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