Now is the time to invest in Black-owned banks

'It’s finally time to walk the walk.'

In the past two weeks, millions of dollars shuffled from startup and investor bank accounts housed in the collapsed Silicon Valley Bank to the JPMorgans, Brexes and Wises of the world. As founders and investors continue looking for new places to park their money, it’s essential to consider this moment as an opportunity to start banking with some of the few Black-owned banks.

Digitally, there is Intrepid, co-founded by Collin Thompson, which works exclusively with businesses and global remote teams. Thompson told TechCrunch+ that his company’s goal is to become a trusted partner to founders, especially those affected by the SVB collapse.

Intrepid offers similar services to Brex, in addition to more specialized assistance, such as all-in-one HR tools. In the wake of SVB’s crash, Intrepid has implemented services like higher Federal Deposit Insurance Corporation insurance and sweep accounts. To create insurance beyond the typical $250,000 backed by the FDIC, Thompson said he’s building a new deposit network product with his banking partners, allowing his company to create multiple deposit accounts within the FDIC-insured limit and letting customers access those accounts through a single application. Intrepid also provides social resources, such as introductions and events, for those looking to grow their business networks.

“Given our diverse backgrounds, this informs how we manage risk, what types of customers we take on and how we serve,” Thompson said. “Our interests, experiences and character guide us, and this will impact the types of customers we attract. We believe that every customer, regardless of their background or identity, deserves to have a financial partner they can trust and rely on, and we are here to provide that.”

There are also brick-and-mortar Black banks, such as Unity National Bank, currently the only Black-owned bank in the state of Texas, which has a branch in Atlanta; Liberty Bank, which has branches in nine states, including Louisiana; and OneUnited, which is based in Massachusetts with branches in Los Angeles, Miami and Boston.

Many Black-owned brick-and-mortar banks are based in the U.S. South, which aligns with the latest venture migration pattern to states such as Georgia, Texas and Florida. Though these banks do not have many branches, they could still be important when considering financial diversification.

“Trust is tantamount to the business model. Black-owned banks can’t make the same mistakes that larger players have made over and over again.” Kelly Ifill, founder, Guava

SVB was known for serving founders who often did not qualify for loans or banking services from more traditional institutions; it also positioned itself as an ally for diverse founders, many of whom have vexing relationships with banks. OneUnited President and COO Teri Williams told TechCrunch+ that the institution welcomes the opportunity to serve any business owners looking for a new bank following SVB’s collapse.

“As companies and individuals are considering diversifying their banking relationships to ensure greater FDIC insurance coverage, they should consider Black banks, which would provide more funding to lend to low- to moderate-income communities,” she said.

Kelly Ifill, the founder of the banking app Guava, said the bar is higher for Black-owned banks, as with Black businesses overall. Many Black-owned banks were launched out of necessity, seeking to help customers who were turned away from traditional banking institutions or discriminated against.

“Black banks don’t have access to the public markets the way larger banks do; their capital comes solely from depositors and the investments they make,” Ifill told TechCrunch+. “This means trust is tantamount to the business model. Black-owned banks can’t make the same mistakes that larger players have made over and over again.”

Ifill said Guava is already starting to see more traction: Her company offers commercial banking solutions and a community of experts and advisers to help small businesses scale. Like Brex, Guava is trying to simplify financial services and make it easier for entrepreneurs to focus on their core product and less on support and operations, Ifill said. She’s also heavily focused on building a network and community for founders to tap into, another casualty of SVB’s collapse that leaves a void in the startup world.

Right now, Guava only works with Black businesses, positioning itself as a safe haven since Black founders were likely disproportionately affected by SVB’s collapse. Ifill said Guava spent the past few weeks introducing founders to investors and providing solutions to existing customers who felt the effects of SVB’s fall. Already, her company has seen an uptick in interest as Black founders look for another long-term partner and new banking services.

“It’s finally time to walk the walk,” Ifill said. “We are at an inflection point; people are being forced to reexamine their banking strategy, and it’s a perfect time to support Black-owned banks when diversifying.”

Those looking for a new consumer bank can look at Kinly; for financial services, there is Greenwood and Capway; and those inspired to build new neobanks can try implementing the financial software Wellthi. At the moment, there aren’t a ton of Black-owned neobanks to choose from, and even fewer can cater to startups. Still, the potential is there, and even increased support for the existing ones can spark innovation for more.

“Whenever there’s a chance to shake things up and rethink standard operating procedures, you want to make sure you’re putting your money where your mouth is.” Sarah Kunst, managing director, Cleo Capital

In the past few years, investments in Black-owned fintechs, such as neobanks, have steadily increased, according to Crunchbase data. Last year, such companies received around $460 million out of the estimated $16.8 billion allocated to all U.S. fintechs — that’s 2.73%, the highest amount of capital allocated to Black fintechs in the past five years. That percentage is also higher than the amount of venture capital dollars Black founders in the U.S. received overall last year, around 1.2%. In 2021, Black fintechs received 1.12% of all capital, preceded by 0.49% in 2020 and 0.58% in 2019.

Data visualization by Miranda Halpern, created with Flourish

Last year set the stage for Black fintechs to see record support this year; for neobanks, the collapse of SVB could be a catalyst to ignite innovation. “Influx of capital will help support Black-owned businesses and, by default, the communities where they operate,” Ifill said.

Gabby Cazeau, a principal at Harlem Capital, said that regardless of SVB’s status, there is a need for more market-segment-specific financial services. She added that investors and founders are starting to discover that larger banks do not necessarily offer the same services that cater to their core needs as startups.

“Black neobanks are focused on better-serving consumers that are underserved by the broader financial system and are a key part of expanding access to great financial services,” Cazeau said, adding that she thinks as the market stabilizes, founders’ choice of banking partners will be part of investor due diligence.

It’s also an opportunity for founders to take an ethical stand, said Sarah Kunst, a managing director at Cleo Capital. “You choose the future you want to see with your dollars in a capitalist society, so if you are moving banks, it’s a great time to move money to a bank that aligns with your values,” she said. “Whenever there’s a chance to shake things up and rethink standard operating procedures, you want to make sure you’re putting your money where your mouth is.”

For all startup founders, this is an opportunity to be true allies and to support Black entrepreneurs beyond sympathetic tweets. Ifill said that right now, putting money with a Black-owned bank means dealing with a partner who is delivering a net positive impact back to the Black community. Currently, Black-owned banks need capital and support to expand their infrastructure and lifespan. There aren’t many from which to choose, but they exist.

The future for them could be brighter. After all, there isn’t much that separates Brex from similar Black-owned banks. Well, except maybe one thing.

This article was updated to reflect that Collin Thompson is the co-founder of Intrepid.