With a new $36 million capital commitment and some entrepreneurs’ help, Discover Bank is aiming to improve financial health in Delaware.
The Discover Financial Health Improvement Fund will help startups and early-stage technology companies who are developing solutions to improve the financial health of people and small businesses in low- and moderate-income (aka LMI) communities. Delaware-based B2B venture investor Chartline Capital, Chicago-based Financial Health Network and DC-based seed stage venture firm ResilienceVC are partners.
“We’re a big supporter of financial literacy throughout Delaware,” Matthew Parks, VP of Discover Bank, told Technical.ly from Sussex County. “And while that’s good, what we find is that once you provide folks with education, if there’s no access to product or service to meet their needs, then what’s the point? So we believe that you need to be able to practice what you learn, and our whole goal here is to bring products and services to Delaware and the surrounding region.”
The fund is looking for startups, both local and beyond, to develop these products and services. They can be anything from apps to help people pay their bills, college savings platforms, or help with home buying, as long as they’re designed to help people to become more financially healthy.
“The beauty of this is that it’s open for anything,” Parks said. “We don’t necessarily have an exact requirement of what product may be, but at the end of the day, there’s a whole host of community development opportunities to help LMI communities.”
As an investor in the Fintech Building at the University of Delaware’s STAR Campus in Newark, Discover plans to use that connection to seek fintech startups. The fund’s initial focus of investments, however, is Sussex County, the area around its Greenwood branch, with growth planned throughout the state, and eventually, the mid-Atlantic region.
It’s a project that aims not only to support Delaware as a fintech hub, but also to help make all Delawareans as financially literate as the state’s reputation suggests.
“With Delaware being a significant banking state where you’ve got the majority of major financial institutions, we should be the most financially healthy state in the country,” Parks said. “And I do not believe we are.
“We certainly have our share of unbanked and underbanked folks, we certainly have our share of folks with low credit scores, we certainly have folks with low savings rates and people with high borrowing costs — we had to put it in a law to try to curb payday lending. So at the end of the day, we are looking to hopefully show that people can do well by doing good right. We very much expect that we not only help a lot of people, but we get our money back with a little bit of return. And hopefully that will encourage others to do the same.”
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