Growing up in foster care on the South Side of Chicago, Derrius Quarles was used to hearing the word "no." Certainly, the now-27-year-old is no stranger to racial discrimination, and was inspired to work through these types of problems by studying sociology at Morehouse College in Atlanta.
After graduating in 2013, Quarles and his fellow Morehouse alums, Ras Asan and Brian Williams, thought they could turn their experiences into a compelling business model. So in 2016, the founders put $500 of their own savings toward the launch of Breaux Capital (pronounced "bro"), an online platform and mobile app offering an automated savings tool and social network to connect like-minded Millennials across the country.
They hope to empower users to take control of their financial futures and make themselves accountable in the present. "We're a medium to give people the opportunity to build community, affect change, and kickstart their entrepreneurial aspirations," explains co-founder Asan. "We wanted to use technology to facilitate the process of assisting folks, when it's not necessarily obvious to them that they have to put away a lot of money today," adds Quarles, who is Breaux's CEO.
Don't confuse Breaux Capital with a bank, however. (If you ask that of the website, the answer is a concise: "No. Nope. Nah!") Unlike a bank that generates revenue by making loans and charging interest, or up-selling customers on financial products, Breaux Capital makes its automated savings platform available to anyone in exchange for an annual subscription fee of between $9 and $19.
Over the past year, the company has attracted more than 1,000 active users across the country, around 20 percent of whom are paying subscribers. The company also charges an on-boarding fee of either $349 or $500, depending on the suite of features a customer wants to access.
Users get access to real-world networking events, including "Breauxcoming," an annual gathering in Atlanta--which coincides with Morehouse College's homecoming weekend in October--where the community can come together and assess its collective progress.
"Think of it as social banking," explains Quarles. "You're doing this alongside a thousand other people, in concert with one another, many of whom know each other online and off. And these cohorts are making decisions to save a certain amount of money at certain intervals, during the same amount of time."
Strength in Numbers
Beyond being just an automated savings platform, the Breaux Capital network encourages individuals to support one another and reach their financial goals. In some cases, connections made on the site have yielded actual investments. TechGroove Festival, an annual gathering of black and Latino college students interested in establishing technology careers, last year received an early angel investment from other members of the Breaux Capital network. TechGroove--which also counts Asan and Quarles as co-founders--is headed up by executive director Tashan Parks Twyman.
That ethos has similarly helped entrepreneurs like Primous Howard. The 27-year-old Atlanta-based real estate investor flips and sells houses. Since setting up an account with Breaux Capital in January, Howard says he has been able to save more than $700, which he plans to reinvest in his company. "The fact that we have a community to talk to [has] helped me get on the path toward financial freedom," Howards tells Inc.
To be sure, it's still early days for Breaux Capital. In 2017--its first full year of business--the six-person startup generated only around $18,000 in revenue, though it projects doing more than $120,000 by the end of 2018. In particular, the founders plan on building out a mobile app, where they say the majority of young users are interested in connecting.
It's also worth noting that finance is an exceedingly private subject for many, so expanding to new users may become more challenging over time. Indeed, a recent study from the investing app Acorns found that 68 percent of Americans are so private they would rather talk about their weight than their money, even as other research suggests that more than third of the population does not have enough saved to cover a $1,000 emergency.
A Crowded Market
Breaux Capital meanwhile faces competition from existing financial technology players such as Mint, which in 2009 sold to Intuit and now counts more than 20 million users. Personal finance is a crowded market, suggests Aurelie L'Hostis, a London-based digital money analyst with research firm Forrester. "With technology, you have a range of startups that are taking over because they realize there is a need that can be met with direct-to-consumer budgeting apps." Unless those apps have clear, actionable takeaways, L'Hostis suggests it may be difficult for new entrants to compete.
Quarles acknowledges the competition, but suggests that his firm--by virtue of being by and for black Millennials, and offering features such as the real-world social events and resources for setting up savings vehicles like an IRA--makes for a different type of community. "We knew that this is part of a bigger problem, which is the inequality that [black people] face," he says.
He also points out that Breaux Capital, unlike most financial services, is completely transparent about how much everyone on the platform is saving. Even as that might dissuade some users from joining, it could be enticing for others: "Transparency creates a different type of interaction, because people see there isn't a huge gap between them," notes Quarles.