Alexis Ohanian’s Bet On Small Businesses And America’s Relentless Resilience

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Alexis Ohanian, cofounder of Reddit and managing partner at Initialized Capital, is betting on America's more than 30 million small businesses with his investment in Y Combinator-backed fintech Betterfin, which helps businesses secure lending

Betterfin had been on Ohanian’s radar since 2017, when he met cofounder and CEO Eric Griego, who had just gotten the startup off the ground with cofounder and CTO Dan Gabrieli. The two had been working on credit technology at OnDeck capital when they realized they could use technology to facilitate the underwriting that banks had been doing manually. Two years later, they had a product to show, and before long Ohanian was ready to make his move.

Since then, Betterfin has raised over $4 million in funding, acquired 82,000 users and brokered nearly $50 million in loans. By analyzing small business owners’ credit history and cash flow, it can connect them with the right lenders. “Our main mission is to help lenders understand how it all works,” Griego says. “We’re basically trying to engineer really good borrowers.”

Now that the PPP has been refreshed with $310 billion, Betterfin wants to help more businesses get access to much-needed relief. “Banks don’t have enough clarity to be cutting checks as fast as they have needed to,” Griego says. “Banks can fund these loans but from their point of view, it’s a big question mark if the government will fund or forgive them. We’re here to help with that.”

This doesn’t apply to corporate bailouts. “I look at bailouts of airlines and I raise an eyebrow, because those don’t look like lessons learned—especially with all the stock buybacks,” he says. “Consider all of those baggage fees we all hate to pay. The IRS makes those tax-free, so the airlines have been incentivized for years to charge us those baggage fees because they collect every penny of that fee.” It is misalignments like these that make capitalism start to go awry, he says.

 

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