Georgia Fintech Academy

Season 2 - Episode 1: Defynance - founder, Farrukh Siddiqui and Cameron Vanderwiele

January 21, 2021 Georgia Fintech Academy Season 2 Episode 1
Georgia Fintech Academy
Season 2 - Episode 1: Defynance - founder, Farrukh Siddiqui and Cameron Vanderwiele
Chapters
Georgia Fintech Academy
Season 2 - Episode 1: Defynance - founder, Farrukh Siddiqui and Cameron Vanderwiele
Jan 21, 2021 Season 2 Episode 1
Georgia Fintech Academy

The founder of a revolutionary new fintech company called Defynance joins Cameron Vanderwiele of Georgia State to talk about this alternative to student loans. Defynance Income Share Agreements are discussed and how this structure creates greater opportunities. 

Show Notes Transcript

The founder of a revolutionary new fintech company called Defynance joins Cameron Vanderwiele of Georgia State to talk about this alternative to student loans. Defynance Income Share Agreements are discussed and how this structure creates greater opportunities. 

Speaker 1:

Welcome to the Georgia FinTech Academy podcast. The Georgia Vintech Academy is a collaboration between Georgia's FinTech industry and the university system of Georgia. This talent development initiative addresses a massive demand for FinTech professionals and give learners the specialized education experiences needed to enter the FinTech side

Speaker 2:

Happy new year. This is Tommy Marshall , the executive director of the Georgia FinTech Academy. Welcome to the first episode of season two of the Georgia FinTech Academy podcast. Uh , you , I hope many of you have listened to all 31 episodes of season one and , uh, I'm really happy. We had such a productive , uh, year in 2020, and we're excited to jump into 2021. And I , I'm not completely sure yet, but we're definitely expecting to do , um , well more than 31 episodes. And in 2021, I'm very excited to have fruit Sidiki here with us today. He is the founder of a company called the finance, and we also have a return student from Georgia state Cameron van Widley. Thank you both for being here today.

Speaker 3:

Thank you , uh , Tommy for , uh, giving me the opportunity to come on this fantastic podcast.

Speaker 2:

Thank you. Glad to be here. So , uh , I want to start with introductions and proof. I want to you to start and take a bit of time. I mean, tell us, tell us about your career and leading up to becoming the founder of finance.

Speaker 3:

All right, fantastic. So the story begins , uh, two , many years ago. Uh, I guess it's been about 30 years now, roughly. And , um , so I started with , uh , Avon corporation , uh, back in the early nineties. I initially started off as an underwriter , uh, assistant underwriter actually , uh , in their professional liability , uh, program for accountants. This was their AI CPA back program. And , um, started doing underwriting. There became a full underwriter, eventually became responsible for the West coast of the U S so spent about four years doing that. Um, I really enjoyed, you know, learning about insurance and really enjoyed the customer interaction aspect of it as well. And, you know, in those early part of your career, you know, you have all types of energy and you're working hard working long hours. And I would just like , uh , proactively start reaching out to some old , uh, insurance , uh, sorry , uh , accounting firms that we weren't able to bring on to the program to try to see if I could revive those deals and hand them off to the sales guys. So did that for a little while and , uh, you know, revive some of these , um, some of these affirms and eventually got noticed for doing that and got an opportunity to become an account executive kind of switch more to the sales side. And I was given the , um, the new England territory , uh , for AI and for the AI CPA program, but also given the responsibility of working with , uh , law firms for their professional liability , uh, as well, and , um, and was able to secure some of the largest non-big six , uh , accounting firms in the new England territory for AI, bring them onto our platform. So did that for about six years and towards the end of that , uh , you know, got married. We were expecting our first child. So we decided to move back to , um, uh, the Pennsylvania area where I grew up near Philadelphia, because I had ended up in Boston for the last couple of years. And then those, this was like 96. And this was like a huge , uh, as you may remember, Tommy, the.com the.com bubble was, you know, blowing up , blowing up in those days. So I wasn't able to find like an insurance position, but had some background with coding and everything in high school and college. So before I knew it, I was starting to do some of that kind of work , uh, started working on some intranet projects and then eventually set up my own small consulting farm and started doing , uh , um, uh, web application development and worked on quite a few projects. Uh, but it all came full circle back to an insurance company who was looking to build, bring their online, their processes online, their whole, you know , quoting and issuance process and everything online. So worked on that project for about a year or so. And that kind of led to the beginning of , um, the 21st century, which is the beginning of the century. And then I got an opportunity to work on a, an alternative mortgage product. There was a company that was launching a mortgage product that was based on a concept of co-ownership , uh , versus debt. And , um, so got an opportunity to become the regional manager, really , uh, taking that product out to market for them, learn a lot from that experience that, you know, things can be done differently in financial services, not just about lending start about one structure. You can do things in , in different ways and then kind of, you know, bring , uh, bring that entrepreneurial or innovation aspect to financial services. So about four years with that company and a few of us were on the management team, we, we left and then we decided to come together. And that was the start of my first entrepreneurial , um, venture. We set up our own company and we decided to , uh, we decided to build a commercial mortgage platform, but based on a lease to own model. And that was an amazing experience. Now we started in Oh five and , um , literally from scratch, you know , like people, the stories right already there , you start from a garage. So my partners arrived two of us, and then we hired one more person and we sort of started building from there. So literally , you know, how do we build a contract? I used to own contract that would be a commercial mortgage backed security that would be able to be secured sizeable that would be able to take to the capital markets , um, you know , uh, work with rating agencies, law firms, accounting firms , uh , raise capital a few million dollar capital to build that business out. So from all five to Oh seven, that two year period we wrote the contract, we built our team. We, by the end, we had about 20 plus people for five different offices throughout the country. Oh, wow. I was the chief operating officer of that business. So , uh , we came to market in spring of Oh seven. We built a deal pipeline of, we were focusing on small balance commercial. We saw to be solid in the market for small Dallin's , um, uh, product. So, but, you know, up to $5 million in commercial properties is basically what was our focus. We had partnered with Deutsche bank for our liquidity and help us securitize these assets. And then we partnered up with Pacific life insurance company, too servicer , uh , for the platform and , and he came to market and we built a deal pipeline of about a half, a half, a billion dollars fairly quickly in about a four month period. Um, and we were getting close to executing on a few deals. And then , and then right, when your , what happened. So basically the carpet got pulled from underneath us. The financial crisis started to begin, but it was a really crazy time like that fall of Oh seven, because nobody really knew what was going on. All you could do, you know, everybody knew the spreads were increasing and all kinds of craziness was beginning, but nobody really knew the full impact of it at that time. But now we're dealing with like customers that are in the pipeline, people that had their engineering surveys done, appraisals done, and all kite environmentals, you know, like the commercial mortgage , uh , process is much longer than a residential process. And now these people are wanting to close, but now the spreads are increasing and now they're not qualifying for the mortgage anymore or based on the , uh, the property , um, income, et cetera. So navigating through that process , um, then running around, trying to figure out some small community banks that we could work with, who could, who could like, you know, portfolio these assets instead of like intellect CMBS with what we were doing with Deutsche bank. And we were able to execute on a few deals, especially for some customers that have sales contracts and you know, that we'll be in a big time jam. Uh , they weren't able to afford these , uh, if these deals fell apart, but ultimately the whole business model fell apart because of the financial crisis. So then my responsibility was to sort of take that business and how do we extend our runway bias enough time to figure on what to do next and how do we pivot away from , uh , this core , uh , the initial business model we were working on. So I was able to do that. We were able to extend our runway for the year and a half. And in that process partnered up with a Lexington insurance company, which was one of the AIG company. Then of course , for you remember, AIG was also having a whale of a time, but Lexington is the leading surplus lines carrier in the country. Um, so we developed a partnership with them to develop a mutual insurance policy for homeowners as a proof of concept. So started working on that, and that lasted for about eight years until 2017 or so. And in that process, I moved down to , um , Tampa, Florida, cause I was in New Jersey. And , uh, so, and then they, of course you don't navigate it through the whole financial crisis and eventual recovery. Um, but what really, what I came away with in this whole process, cause I kind of experienced this financial crisis from multiple perspectives, right? Because as a business owner, you know, kinda experienced that part of it, what happened to our business, basically we got torpedoed and then that impacted our fi you know, our personal lives as well, our personal finances in dealing with all those issues. But then as a financial services practitioner, as an industry insider, to see that, you know, a lot of, a lot of this was just self-inflicted wounds in terms of what the industry did and , and everybody was involved, right ? We can't just blame the banks. Consumers got very greedy, right , chasing after houses that they couldn't afford mortgage rates where the way, the way they are all kinds of crazy mortgage products came out that, you know, in a sort of , uh , created the wrong incentives for consumers. So I really started thinking about, you know, social responsibility and financial services. How can we do things in a better way? So we, you know , hopefully build better solutions that are more customer friendly and level the playing field. And that led to in 2017, 2018, really looking at this issue from different perspectives and starting to survey the landscape and financial services to see what areas , um, for what pain points , uh , we could work on, or I could work on. And that led to the finance because by 2018, what really was apparent was this debt crisis had become this crisis, right? Because student debt has been around forever. But, you know, I think probably since like mid 2012 or so, a student debt exploded to what, three times, four times what it used to be, and it helped us $1.5 trillion crisis. So

Speaker 2:

I'm gonna stop you there for a second city. That was awesome. Lead up. And then let's come back to finance in a minute. Um, camera , I'm going to let you squeeze in here and , uh , just give us quick intro about you and then I'm going to let you and fruit get into a discussion around , um, if finance,

Speaker 4:

Okay, thank you. Uh , my name is Cameron. I'm a senior right now at Georgia state university. I'm pursuing an undergraduate degree in finance and then the certificate from the Georgia FinTech Academy in financial technology. Um, right now I'm in banking and FinTech and we're working on a project with FIS and it's a thought piece on serving under-banked and unbanked and how financial institutions of financial services can engage with these people. Um, and I think the finances right in that similar vein of how can these bigger corporations and these big name brand firms interact with individuals, and we're seeing this intersection of people and firms, whereas beforehand, and a couple of years ago , um, especially as a younger person, it felt like you against the world and you can solve these corporations, but as I've learned more and moved throughout my undergraduate degree and talked with more people, it definitely seems like there are more and more firms out there that are extending a helping hand and wanting to help students like myself or , uh , underserved individuals. And it's nice that we get time to speak with you today. And that firms like yours exist and firms like FIS are out there. Uh , so thank you for your time today.

Speaker 3:

Oh, you're welcome. And I think that's one of the big things that came out of the, at least the way I look at it from the last financial crisis is that, you know, that this emphasis on doing things differently and doing things in a better way and a more socially responsible way, I think you're right. A lot of people are starting to look at that. That issue has started to work on solutions along those.

Speaker 5:

Um, so Cindy can tell us more , um, or Farrukh , I don't know, I'm calling you by your last name, Peru callous about , um, about just kind of give us , uh , the, the value, the defiance kind of overview value prop , um, how, how you , um, constructed that , um , value proposition.

Speaker 3:

Yeah. So by the time we know I started to look at this whole problem with student debt and 2018, and I'd already worked on, you know, alternative , um, alternative solutions to debt, right, as work , uh , the commercial mortgage put ourselves and so on. So I was very much acutely aware of kind of developing solutions that , um, present alternatives to debt. So as part of that research in 2018 income share agreement concept came before and we started looking at it and the, you know, the income share agreement, you know, people trace it back to Milton Friedman . He wrote like a seminar, let's say in the early fifties about, you know, capitalizing on human human capital, right . Investing in human capital. So a Yale university had experimented with in the seventies and they have failed or mostly . Um, but, but a lot of, you know , a lot of the recent providers have learned from that experience. And by 2018, when we were looking at it, Purdue university had already started in 2016 using income share agreements to fund their students and coding boot camps were using them vocational schools, et cetera, but everybody was talking about the student debt crisis. And from my perspective, yeah, working with students is wonderful and you're definitely slowing down the crisis, but you're not dealing with it directly. The people that are dealing with the debt right now, the one point trillion dollars at that time. And now it's almost $1.7 trillion and 45 million people. So we thought I decided to focus on, okay, let's focus on the existing people, existing debt, and how can we help them refinance away from a debt-based structure to a , to a debt-free structure of an income share agreement. Yeah .

Speaker 2:

Sorry to sorry to stop you, but will you unpack the income share agreement just a little bit? Um, cause I know when I, when you and I first met, I, I, you know, I guess embarrassed to say, I w it just was not a conceptually something I had much familiarity with at all. And as we've talked further, I've come to appreciate that and what the possibilities are and how we're probably in a better environment today from terms of technology capabilities, in terms of , um, the culture, et cetera, that , um, can really bring , um , about a variety of different conditions that, that make this , um , concept more attractive and really more possible.

Speaker 3:

Sure. So , um, an income share agreement or ISA is exactly what it sounds like. It's an agreement to share income for a certain amount of time. In our case, we would refinance someone student loan, we would pay it off. So the student debt would come off their credit history and so on, and they would agree to share a small percentage of income for a certain amount of time. So unlike a loan , it's not about paying back a certain amount of money. Plus interest is just about sharing a certain percentage of income for a certain amount of time. And there's no obligation to make any amount of payment. It's just whatever income is shared during that time, that is the obligation for the customer . So you can imagine if someone's income goes down, their payment also goes down because it's a percentage of income. And in our program, if income falls below $25,000, we automatically pause the payments. So the, one of the great benefits of an income share agreement is the downside protection. If something going to lose their job, they don't have to worry about making that payment and have to worry about not making the payment and having it reported to credit and default proceeding started or interest being capitalized on their principal . The principal growing, basically the problem gets more complicated or worse where with an income share agreement that never happens. Let me go a step further because we actually are investing in people's earning potential. During that time, we would help them find a job. So we've actually curated a marketplace of resources like career counselors, job boards, recruiters, and other resources to help somebody get back on their feet as soon as possible when they go through a difficult financial time like losing their job or whatever the case may be. And those resources are also available during the normal course of the career to always help them optimize their income, guide them into what's the best time to switch jobs , um, uh , upskilling they're , their they're upskilling , meaning learning new , uh , new , um, new things along the way to improve their skillset , to get, to get better and get it , get more income along the way. And so this concept of like, not being a lender sitting on the other side of the table, but being someone that's invested in someone and sitting right next to them and our success and failure tied to them , our customer, I think, is what really sets the income share agreement apart from a , from a loan .

Speaker 4:

Yeah. No, thanks for that. That's great context. And then I guess, Cameron, I'm just curious to hear as you're , you know , been studying this and listening to , um, just what, you know, you're a student, how has this , uh, got , uh , hit you as you've been starting to understand it? I think a big thing for me is I like the idea that you're not chasing down your interest rate. Um, my understanding is that sometimes your interest rates can get a little out of whack , um, and that accrued interest over time can really be a big burden. So the fact that it there's a cap and that there's a set on it. And the fact that to fruit's point, they're essentially investing in you, these are giving you the opportunity to not have to worry about that debt. So you can focus more on your career and more on your hobbies and your interests , and you can get settled after you graduate. Um, and then you know that you are taking care of that debt, but it's just in a new form that is actually encouraging and helpful and supports you early on in your career. So that's a big thing for me as a student. Um, and then I also liked the fact that they are curating these resources and helping you with your financial literacy and helping you get connected with employers. Um, that's something that I haven't seen a lot of in schools, whether it's K through 12 or at the university level , um, there's not a lot of help with financial literacy. Oftentimes at least here in the United States that kind of falls back on people's home situations . So their parents and guardians are expected to teach them those things and not having that structured help in that structured information can be a big burden and can put people behind in life.

Speaker 3:

No, I mean, I think, yeah, you , you make some great points. Uh, Cameron, I mean, ultimately , um, like I mentioned a little bit earlier, just this , the alignment of goals where both parties have the same perspective, you know , uh, like if we fund you for example, and we want to make sure you're successful and when you're successful, then we're successful. And when you're struggling along the way, if you do struggle along the way, we're there to, to be with you and assist you along the way. And, and the one other thing that people may, some people complain about it, they look I'm going to do well in my career. So if I take an income share agreement, I may end up paying more and that's certainly, there's a possibility of that. But at the same time you get all the services and the support structure that's , that's built into it, but we've also kind of protected the upside to the payment cap is there to, so you don't end up paying, you know, forever or too much money. Um, we've given you, we give an option for extra payments. You can produce the income share agreement one month at a time. So you can start off for 10 years, but, you know, by the, by the end, make it nine years and knock off the last year, which could, which should be the most expensive cause your income should be the highest towards the end. So , um, so we've kind of built all those structures along the way to kind of build a balanced product , uh, that would help get people out of debt. And then really, to me, it's also about living life on your terms. And I think you alluded to that, Cameron, because the more people I've talked to, people have this like fixation with paying down the debt. So you come out of college, you want to pay down your debt, but you , so you're not going to buy a house. You're not going to start a family. You're not going to save money. You're not going to make investments, all the things that people have traditionally done in this country, you know, to kind of build their life. People delay that for a few years to pay down this debt where I think with the income share agreement, you are empowered to live life on your terms. You don't have to kind of fixate , uh , to do, to kind of delay life.

Speaker 2:

Hm . Uh , fruit, just getting I to kind of dig in deeper and just try to understand how the company works , um, in a bit more detail. And I thought maybe to start that I love your website to finance.com to listeners that D E F Y N a N C e.com. Um, and if I go there, it's like, okay, how does finance work? And I , and I think this made a whole lot of sense to me. So first to get started, the student applies to refinance your student loan with the D finance revolutionary debt-free solution. Okay. That makes sense. Next step would be what you've applied is determining are you as a student , um, or maybe just recent, post-grad a good fit for each, you know, a good fit, a good fit for, to finance or use a student is defined as a good fit for you to finance is a student a good fit for you. Um, and if so, then you introduced this income share agreement, the defense , the finance, and become chairman and , and you all just heard us talk about the , uh, what , what the income share agreement is in principle . Um, and then of course defining then is paying off the debt that the student has in full . And then you're sharing as a student, a small percentage of your income with us for a set period of time, which has governed by the income share agreement that we've discussed. Um, and then there's this idea of total protection. So whether you're kind of struggling or accelerating your career, the , the finance ISA is going to protect you. And I think that's where we got into that downside risk protection, upside giving too much protection. Um, so, you know, so they don't like, okay, from a business standpoint, I guess the first thing that occurs to me is like, you need to find students, students with debt to engage with, to finance. So that's an important , uh, kind of demand side , um, problem that you're , you need to begin addressing right away. Um, and then the next thing that occurs to me is you need money to pay off. You agree to take on say Cameron in this case. And you're like, okay, Cameron, we like everything . There's a fit here. Um, we need to pay down that, you know, $500,000 in student loans that , uh , I'm exaggerating that's then. And , um, and so where you need to have those, that liquidity, that ability to pay , you know , make that payment , um, of those loans down to get the CA the , um, get the process started or executed. Um, do I have that right? I mean, do you feel like those are the two kind of major , um, efforts you're trying to manage as you're building the business that , um, uh, to address?

Speaker 3:

Absolutely. And I think you used the word demand. So the other side of it is the supply, right? So the demand and supply have , have to have to get created. And this is like one of my big lessons from the, you know, that, that failed endeavor , uh, the commercial mortgage shop. Cause like all of our, all of our eggs were in with Deutsche bank, right? Our liquidity was coming from Deutsche bank. So , so the last street kind of shut down , uh, then that whole business model fell apart because our liquidity fell apart. So this time around, I really wanted to kind of build a liquidity solution that will be more , uh, you know, eliminate some of that risk. And that's why we decided to launch a fund for investors. So right now the fund is available to accredited investors and investors would be able to invest capital in the fund. We use that as our supply liquidity to fund these student loan refinancings , um, uh, with the ISA and as those payments are coming in with the ISA, then we distribute those payments back to the front and back based on their year in the fund on a quarterly basis. The cool thing is Tommy , that it really creates a, a fixed income, passive income stream for investors because everything is based on people's earning potential and incomes tend to be stabled at growing over time. The volatility is not there. Like you would have a lot of asset classes from an investment perspective. So you get that low volatility, lower risk, like a fixed income, but the returns are like in the seven to 10% annualized, closer to equities. So we really feel like it's a really great opportunity for investors to have a recession hedging type of an asset class in their portfolio to offset some of the risks that people may face in economic downturns or different volatile times. So that's the other aspect of our program is we have this ISA side and then we have the investment side. So we essentially have these two products that we have to market to two different , uh, two different customers. Uh, but, but both of those have to work together for the platform to be successful.

Speaker 2:

Mm yeah, no, that makes lot of sense. Um, I know Cameron, you've been studying a bit of finance. Um, I'm just, I'm curious, are there any questions that have been, come up to you as you began to think about how this model might work

Speaker 4:

To me? The finance makes sense. More of my questions come from as a student and as a student with loans. Um, what are the data points that you look for like that that algorithm looks for and how do you, how do you work with students to figure out what their plans might be? Hmm .

Speaker 3:

Yeah. I mean , um, this is FinTech after all, we should have talked a little bit about the tech part of this. So yeah, there , there is certainly an algorithm that we've developed , uh , in this last couple of years that , um, and we call it , uh , we call it prays pricing and risk algorithm for income sharing. So it kind of addresses both sides, you know, how do we price the income share agreement? And then how do we assess the risk for each individual that's applying for the program? And the pricing has to be , um, competitive for both sides, right? Because we have to compete against people that are looking to refinance their student loans . They have options for doing that. Like companies like sofa , common bond, and some credit unions, banks, et cetera, that offer those , uh , refinancing solutions. So they want me to make sure that we're competitive there at the same time, we need to give a return to our investors so we can attract the supply of capital to do this. So one of the things, one of the reasons, one of the decisions we made was to really focus in the beginning on the higher end of the student debt spectrum. So focus on the graduate plus loans, the parent plus loans and the private student loans like target those for refinancing because those allow us, the IC really stands out because those are un-subsidized. They have minimal consumer protections where the ISE really stands out as an upgrade alternative. And because those are higher priced, at least in the beginning of the program, we're able to give it a little bit of return to investors too. So that's pricing wise. That's how we're kind of targeting with work. That doesn't mean we can't work with other people as well. And then we adjust the risk for each candidate. And we look at various factors. We've developed our own custom underwriting criteria that focus on profession industry, you know, individual job history for each, each candidate. Uh , we look at credit, but we do not make a decision based on a credit score because we feel like credit scores are not fair indicators, younger people, because they haven't had enough time to establish their credit history and get their credit score to the 700 plus range where you can get the really good interest rates and so on. So we retract the credit score cause you want to see how we're doing our underwriting criteria is doing against the credit score, but we don't necessarily make decisions based on the credit score. But we do look at credit history, other factors, late payments and collections and different things. And we assign different risks and risk adjustments based off of those. That's how the process works. And it allows us to give individual data-driven pricing , um , from an underwriting perspective to each candidate and obviously the educational background and those types of things go into it too.

Speaker 4:

That makes sense to me. That sounds great. Um, my next question off of that is how does defiance make money out of this and what is the order of payment ? So it is the money that comes in. Does it pay off your investors first and then comes back to defiance ? Like, what is that type of breakdown? Like what's let me back up. What's the life cycle of the payment?

Speaker 3:

Yeah. So the, the fund that I spoke about the fund is an independent entity. The fund is not owned by the finance. It is by the investors who have shares in the fund. The finance has the management agreement with the fund . So we manage the fund, we manage the underwriting. I mean , all this stuff that goes around the business side of this. Um, so it's the , the person who's refinancing pays a , uh , a small processing fee. So there's a fee that , uh , the finance earns from the refinancing person and then the investors in the fund pay , uh , pay a small sales charge to join the fund. And then there's a , um , fund management fee that we would charge investors. And what I quoted that seven to 10% return that we're anticipating based on our modeling that's net of board's fees. And then there's also a servicing fee charge , uh , the fund for servicing all the payments that are coming in. Um, cause obviously all those payments require , uh , effort to, to collect and to monitor someone's cause you can imagine, right, for us, it's all about income sharing. So we have to have procedures and technology to, you know, monitor someone's income and how their income may change or switching jobs and how do we validate their income and verify it. So we have multiple layers of, of being able to do that as well. So that goes into the servicing process and if people are late or people don't make their payment , or we have to obviously surface those and collect those payments, there's a lot involved in that whole service equation.

Speaker 4:

That sounds great. And as far as my understanding of it is that sounds very streamlined and very fair to all the parties involved. Um, as we've been learning in some of our classes, like a lot of like funds and managers and credit card companies, they make their funds off of payment processing and all these small management fees. But from what you've said, it sounds like your model is very streamlined, very fair. Um, and I like that, that, that is encouraging for me to consider this moving forward.

Speaker 3:

No , absolutely. And really, as , uh , you know, as , as Tommy mentioned, you know, we become the next billion dollar unicorn in the future and we scaled this things . Um, I think there'll be a great opportunity to make pricing even better now with scale , uh, and , and optimize pricing more and more for both the investor as well as, as the consumer. And I really also think long-term from a technology perspective there , uh , you know, we have plans to develop, you know , AI around this, where as we , uh, finance more people as we track their progression in their careers over time and be collect that, then we're able to use that data to give insights to people, to help them navigate their career and different things. And also kind of document over time how, you know, outcomes are happening from universities to careers, right ? Because the cost of education is going up. As we know, part of the reason the student debt crisis has exploded is the cost of education has gone up so much over the last 12, 15 years. But, you know, it's not necessarily tied to real , uh , real outcomes, right? Like, I mean, you know , like universities may charge the same money to an engineer, tuition, to an engineer, to somebody who's pursuing social work and what the income outcomes for those two professions are very different. So I think over time, our data we'll be able to document some of that and hopefully , um, you know, get some of these university to adjust their tuition models, to be more fair, fair for all different types of students and the types of careers that pursuing, because we need social workers and engineers, we need all kinds of people, you know, in the economy.

Speaker 2:

This has been very educational for me. I love this. I think there's just so many possibilities for this model. Um, I do want to pivot now to just , um, let's, if we could talk for a minute about the , the kind of key news from the industry, that's caught our attention in the , uh, in the last week, it's been a , it's been a remarkable week with regards to FinTech related news. Um, but , uh , I'll let you start , um, for Ruth . Um, cause I think there's been some things, you know, certainly we have , uh, today's January the 21st, yesterday, we , um, saw a new president of the United States take office and there has been some significant kind of focus in the vitamin, the Biden platform as they was campaigning. And now in the administration around student loans , um, uh , I'll turn it over to you.

Speaker 3:

Sure. Um, we've been, obviously when it comes to student loans specifically, we follow it very, very closely because , uh, uh, what, what the government may end up doing, you know, could have an impact on our business in a positive or negative. So we we've been watching it carefully. Um, like one of the big, big items that has been talked about recently is this whole student loan forgiveness, right? Everybody has their opinion on this. Uh , and even on the democratic side is varying opinions. Biden has taken the approach of, you know, $10,000 of student loan forgiveness, but kind of tying it to income levels to make sure that people that restrict benefit from it, the people that aren't earning as much money, they have a bigger benefit. And we generally speaking, I kind of like that concept, but there's also a lot of pressure from within the democratic party of doing much bigger forgiveness, like $50,000. That's where like Chuck Schumer, Elizabeth Warren, and some of these more progressive oriented Democrats have proposed. And then there's this, you know, there's the pros and cons of that. So as a company we've been developing our own position regarding student loan forgiveness. And , um, I don't want to let the cat out of the bag right now, but the next few, a couple of weeks, we're gonna you're to start to see some content coming out from us talking about this. But the one story that I did read , uh, just yesterday, I think , um, after Biden signed the executive order to extend the , the moratorium on federal student loan payments until October, because I think that's been going on since March of last year. So it's been about a year and a half now it's going to go on. But one of the things that of student loan forgiveness is this $50,000. There could be some major tax ramifications because that kind of forgiveness in the basically , uh , from a tax perspective, you got that income $50,000 and you maybe you may be taxed for that, right? So that's the big issue that people are talking about too , regarding student loan forgiveness. And there are some , um, um, some ways around it like insolvency and disability, et cetera, where you won't get taxed, but this issue may get taxed. I think that's something that we have to look at very closely as we go forward as to what happens and yeah, people may get as benefit, but then they may also have a big tax bill next year to deal with it.

Speaker 2:

Yeah. The other thing that occurred to me was , um, Biden has nominated Rohit Chopra to lead the consumer financial protection Bureau CFPB. And , um, I understand that Mr. Chopra , um, w used to be part of the CFPB and the Obama administration at some period and was focused on student lending. Um, and so I guess I'm curious too, so I guess I'm just assuming that if Chopra's confirmed, there's going to be a significant kind of focus he'll place on this whole topic of student lending from a regulatory standpoint. Um, so I know that's something you're going to he'll watch closely as well.

Speaker 3:

Yeah, absolutely. And , and, you know, he has a great history of really going after the parent Tory aspects of student loans, especially the for-profit and the for-profit colleges that are really thinking about that to a lot of people. So, I mean, I think this is a great thing at the end of the day. Cause I think the servicing of student loans is one of the major reasons why this crisis is what it is and, and th the incentives are not aligned properly within the servicing aspect of things to , to really , uh , get services to actually helps you go on borrowers. I think that's, and that's a bigger discussion. We can have some time in the future, but , but I , you know , I welcome this and , uh, I think , uh, nobody like this coming here would start to address those issues. And I think people like Chopra will see that I see a structure, right ? I think this consumer protection is already built into it. Hopefully people will see over time and we will do our part to educate that the ISA is a real great alternative for student loans.

Speaker 2:

Yeah, yeah, no, I see that. Um, Cameron, how about you news, that's caught your attention in the last week.

Speaker 4:

Um, and other governmental regulation news, seeing the DOJ really hammered down on plaid and visa and see them walk away from their merger was pretty impressive. Um, and to me that makes a lot of sense because it , it is a little intimidating having a credit card company have access to that API that connects consumers with their bank accounts and connects them with all these different payment apps and all these just to consumer apps in general. So it was a little frightening. Um, and I think it's interesting to see , uh , moving forward, how federal regulation interacts with these big companies, whether that's Fang companies or these big credit card companies, or , uh, these FinTech startups. So I think we're going to see a lot more of this moving forward, especially as we have firms like defiance come up and tackling like social problems. Um, I think it would be interesting to see how policy shapes , uh, private businesses, but also how private businesses are shaped policy.

Speaker 2:

Right? Yeah, no, yeah. I'm with you. That was really a big , um , big news item last week. Uh , the last couple of things I'd mentioned are more from a FinTech financing related standpoint. One is that affirm , um, max left his company , um , went public last week. Um, they've just been skyrocketing in terms of growth over the last several years, and that only got increased , uh, during the pandemic. So they , they did their IPO , um, and the, the stock price went up a hundred percent in day one. Uh, and so kind of closed out that first day at around $23 billion valuation , which was remarkable. Um, and then the other bid on financing was a local company here backed , um, which was started , um, and is invested in by the Intercon exchange here in Atlanta and , uh , in a variety of other companies , uh, as well , uh, announced that they're going to do a special purpose , um, SPAC , um, financing in March they're intending to that , uh , would value that enterprise at around $2.1 billion. Uh, and there's just been a lot of stacked news , um , related to FinTech , uh, beyond even that one in the last , um, couple of weeks. So lots and lots happening in the FinTech standpoint. Um, and I know we'll , we'll continue to be well, listen for Ru camera . Just thank you so much for being part of this conversation today. Thanks for your engagement with the Georgia FinTech Academy. Um, look forward to continuing this conversation and , um, let's fruit certainly continue to talk about ways that , um, the FinTech Academy can partner with you as you're growing your business. Um, Oh, and we should mention for root that , um , you have some great news related to,

Speaker 3:

To Techstars. Absolutely. We got accepted into the Techstars Boulder program, Boulder, as you may know, is their original Techstars that started about 15 years ago. So we were accepted into that. And our pro arc accelerator program is beginning next Monday on the 20 of January. And the demo day will be April 27th . So I'll reach out and let everybody know about that. And hopefully people can , um, because of COVID, it's all virtual this year, so anybody can kind of join in and , and see what , uh, how we come out of Techstars. Uh, in the next three months, we certainly expect our valuation to increase and raise more capital , uh , afterwards. So that's a huge win for us. And then the managing director is , uh, is Andres Beretto the new managing director of that program. And he actually has direct experience raising an ISA fund. So it was also awesome to, you know, get somebody like that to, to, to support us and be our mentor. One of our key mentors, somebody who's done it before. So yeah, it's really been a great , uh, a great experience , um, getting into that program. And we really look forward to kind of take into finance to a whole new level. Now

Speaker 2:

I'll add too , for the listeners to finance is a FinTech startup. That's part of our Georgia ecosystem. Uh, and that's an , and is engaged directly with our advanced technology development center at Georgia tech. Um, so there's a, you know, we're very proud of that. And , um, you know, in , uh , we want to make sure we're doing what we can as an ecosystem to support the development of your business group . So we're just so excited that you decided to start in kind of further or not started , but further grow this enterprise here in , um, in our neighborhood.

Speaker 3:

Yeah. I mean, we, you know, we were accepted by ATDC , uh, earlier in 2020 and, and honestly, Tommy you, and so many of the other folks in this ecosystem of , of FinTech and startups in Atlanta, I mean, I've, I've been just blown away as to how supportive everybody has been, how welcoming everybody has been and helped us connect with so many folks , uh , in the Atlanta community. So yeah, I really, this, this is really awesome. And then the last thing I want to just quickly say is that we have , we have a crowdfunding campaign going on on net capital , um, and that's going to be ending on the 29th. So what a week left to invest into finance, because we certainly expect our valuation to go up a lot after Techstars. So this is a good time to invest and make some quick returns , uh , hopefully as well. So , um, I'll share the link here in the chat here, and if you can, as you publish this, thank you some artist share this link. That'd be good . That'd be great.

Speaker 2:

Awesome. Well , do , um, well thanks to you both. And , um , we look forward to an exciting future for defining Spanx bunch. Thank you.

Speaker 1:

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