The last 18 months have been turbulent for many companies, but small businesses were affected more than ever. They had to close down, lose all or some of their clientele, and somehow support themselves in these circumstances. And they didn’t have the support of a board of directors, a CEO or the other luxuries of a larger company. As a result, many start-ups saw a hole in the market. This need is precisely what three ex-Robinhood employees saw when they launched their growth capital platform: Parafin.
How did Parafin get started?
They used to work for the same company. The president of Parafin is Ralph Furman, a former Robinhood data scientist; the chief executive is Sahill Poddar, Robinhood’s former head of machine learning; and finally, the chief product officer is Vineet Goel, Robinhood’s former head of risk and fraud engineering. This team of three also received funding from early Robinhood investors for venture capital. Last year, they got $3 million in a seed round, and earlier this month, they raised $30 million in Series A.
But what is Parafin’s mission?
Unlike some of us, Parafin claims that math is their strong suit. They want to make it easier for small businesses to receive funding, so they handle all the “math,” including capital and underwriting. Their mission is to empower small businesses to gain the growth capital they need to grow and prosper in an environment that has historically limited entrepreneurs from pursuing their dreams. They want to provide funding so that a small business isn’t limited by the archaic limitations of credit checks and other typical guidelines within the industry. Their mission and company are backed by the founders of Robinhood, DoorDash, Carta, Chime and Plaid.
Are small businesses in need?
They are. According to a February Federal Reserve Bank survey, 30% of all small businesses said they wouldn’t be likely to survive 2021 without government assistance. Moreover, 8 in 10 minority-owned enterprises said they were in poor financial conditions due to the pandemic. These small businesses need the money more than ever before, which is what Parafin promises to address. The start-up can help with the growth capital businesses need to stay afloat. They also can assist owners who may not have the best credit because they base their underwriting on sales and not credit scores. They want small business owners to not only survive but also thrive.
Start-ups supporting small businesses
Parafin isn’t the only business model focusing on this issue. Many old and new start-ups are trying to provide support for struggling small businesses. Whether they are providing capital or making daily operations easier, they all exist for the improvement and benefit of entrepreneurs. Here are three examples:
- Findr is a the world’s first marketplace for business partnerships. Businesses write their business and commercial needs, and then they can find each other and try to connect. In many ways, this start-up is a dating app for business partnerships.
- Start-up NightingaleHQ launched a GoSmarter toolbox, which provides no-coding tools to help integrate AI into your workplace without having to know code. The toolbox automates manual tasks such as invoice processing, supplier onboarding and more.
- SendGrid is the world’s largest cloud-based email delivery platform. While they help large companies such as Uber and Airbnb, small businesses can also benefit. They can use this company’s services for effective email marketing to grow their businesses and clientele pool.
One thing is clear: Resources for small businesses are out there. Hopefully, these good ideas will help entrepreneurs stay afloat.
