Why we invested in FloatMe, an app covering cash gaps and improving financial lives
Desperate borrowers often fall deeper into debt as they try to cover cash shortfalls. While buy now, pay later loans provide some relief to credit-worthy borrowers, many people turn to high cost payday loans or equally expensive credit card debt. Consumers living hand-to-mouth have historically paid exorbitant costs – as high as 17,000% per year – if they needed a payday loan to help them cover expenses.
But now, FloatMe has developed an app that provides a low-cost way for people to access cash when they need it. Initially targeted toward millennials, FloatMe has grown rapidly since launching its consumer-facing app in 2020.
FloatMe’s impressive growth is one of the reasons we joined a $16 million Series A round led by Foundry Group. We think the company’s initial traction is indicative of how well it is solving a problem in the financial services marketplace.
We especially like the FloatMe team, led by Josh Sanchez, CEO. Sanchez, a Latino founder, decided to develop the app after having to take out an expensive payday loan in order to fix his car after an accident. His co-founders are Christopher Brown, CTO, and Ryan Cleary, COO.
A “float” or loan from FloatMe is designed as a short-term way to access cash. Users, who pay a small monthly membership fee, can borrow up to $50 a month interest-free, and access a range of financial management tools.
As a fintech solution, the FloatMe app goes beyond meeting a need for a short-term loan, it helps promote financial inclusion for people that have historically been disenfranchised from the traditional banking system..
FloatMe positions itself as “your best financial friend (BFF).” This creates a trusted environment, a bit like an old-fashioned community bank or credit union. And the app delivers. FloatMe says it has saved members more than $80 million in overdraft fees since it launched.
In a crowded marketplace, FloatMe is gaining traction against well-funded income smoothing apps – such as Earnin, Even, and DailyPay – and neobanks, like Chime, Ally Bank, and PNC.
We think FloatMe can build on its initial success in order to continue growing. While Congress is mulling a cap on overdraft fees, predatory lenders will still be able to charge high interest rates for short-term loans. For FloatMe, that means there will continue to be strong demand for a few extra dollars to help put food on the table or keep the lights on.
Brandon Hoffman is an Investor at Samsung Next. Carlos Castellanos and Antonio Key also worked on this investment. Samsung Next's investment strategy is limited to its own views and does not reflect the vision or strategy of any other Samsung business unit, including, but not limited, to Samsung Electronics.
If you’re a founder, we’d like to meet you.