This year’s cohort includes 12 startups and includes a company from as far away as Antigua, Guatemala. The cohort also includes two local startups from San Diego County – a rarity for the global accelerator program.
Inspired by the ‘Underbanked’
Oceanside resident and
Hughes’ own journey began in a military family in Oceanside where he learned the value of hard work. After college, he went to work at JP Morgan where he found himself “at odds” with an institutional banking culture that was fee driven and indifferent to low-income consumers. He left the bank to become an entrepreneur.
“I saw my path as, if I wanted to solve problems, I had to figure out how to build something to solve a problem,” he said.
Hughes’ first company raised $500,000 “off of paper” before he left the business to his partner. His second company couldn’t raise money at all, so he went back to work, this time as a manager at the Fairmont Santa Monica where he found the inspiration for SPARE witnessing the hotel valets and other “underbanked” employees using check cashing businesses, prepaid debt cards and other high-fee transactions instead of traditional banking services.
“They were going to the ATM seven times per month and spending on average $4.15 in fees, costing them 7.31% of their own dollars accessing their own dollars,” he said. “We saw same thing happening with low-income consumers was also happening to the small businesses in the community. They were having increased cash management costs.”
After doing some research, Hughes found that financial services companies like Brinks and Loomis were charging small businesses between $400 and $1,600 a month to manage cash when factoring in time.
Bridging the Digital Wallet and the Register
Hughes launched SPARE In 2018 and began offering people access to their money “significantly cheaper” by facilitating cash withdrawals from small business registers rather than high-fee ATMs.
“The initial thesis was, ‘well, if we could connect a cash seeking individual with a business trying to offload that cash, could we drop the cost across the board for both of them?’ And the equation yielded the answer ‘yes we could,’” he said.
By 2019, SPARE had doubled its revenue over the previous year, had over 500,000 users and around 52,000 registered merchants in the network. Then the pandemic hit and because small businesses were shut down, SPARE was “back to drawing board,” Hughes said.
During the pandemic, Hughes sought out partnerships with point of sale (POS) hardware companies to become lines of distribution – a move he said will grow SPARE’s merchant network from 7,000 today to over 50,000 in seven to nine months and by end of next year be in over 150,000 locations where users can access their money through Apple Pay, Venmo, Coinbase and more to “liquid their assets at registers.”
In addition to SPARE’s own app, Hughes is looking to share application programming interfaces with digital wallets like Chime and Dave and become “a bridge between the digital wallet and the register,” he said.
In Techstars, Hughes said his goal is to learn how to scale SPARE “as fast as possible.”
Low Income to Wall Street
Her Wall Street experience led her to start a company licensing a financial literacy educational program for college students to schools across country.
“But after a while I wanted to get back to my retail investing roots and create a solution for the everyday retail investor who is trying to put their hard-earned money to work to level up their financial life a little bit,” she said.
Reason and a Ring
Falcone said the idea for Reason came in 2020 when new investors, especially women, were “diving into the retail investment market” downloading Robinhood, picking stocks and buying crypto.
“As a certified financial planner, I’m always interested in what motivates people to take certain financial action,” she said adding that after some research she discovered new investors, particularly women, had shorter term financial goals than retirement for their investments. “Traditional personal finance mantras would say not to invest your money for shorter- or medium-term financial goals and keep it in a saving account.”
The investors, Falcone found, lacked strategy and a way to track their investments and often were hoping that one would “go to the moon,” but she saw the potential in helping these short-term retail investors reach these short-term goals they way she helped her wealthier clients form her Wall Street days reach their financial goals.
One of the first investors Falcone helped with a short-term goal was her now husband, who came to her for in what to invest in to grow his engagement ring fund.
“I was a female investment analyst, and what better carrot – pun intended – for me to say, ‘yes, I got some investment ideas,’” she said. “So nine years ago I sent him what is now the very rudimentary prototype for Reason.”
Falcone used that simple spreadsheet showing what stock buys might get her husband closer to his goal of a more expensive engagement ring to ultimately build out a tech solution that she put in front of consumers for feedback, made adjustments and started building a commercial platform for it last year.
The Reason platform is now currently in private beta and will be launching to the public in a few weeks. “We’re solid on product. We’ve got a great interface that people are excited about using,” she said.
Falcone hopes Techstars will provide her with guidance on a go-to market strategy for Reason.
“The consumer fintech space is crowded and noisy because of some of the other players that exist there, so we’re really looking for some mentorship to help us really rewrite the narrative and change the way people think about how investing fits into their more daily financial life,” she said, adding that she is hoping to go from 50 beta testers to 5,000 active users on the platform and is also looking for investors.
CEO: Tara Falcone
Business: Fintech investing platform
Headquarters: Del Mar
Notable: Reason platform starts with the end in mind, providing investors a way to assign investments to different financial goals.
CEO: D’ontra Hughes
Business: Financial service connecting underbanked with small business cash registers.
Revenue: Over $4 million total
Notable: SPARE doubled its revenue in its second year, before the pandemic prompted a reboot of the company.