A newly launched fintech called Kikoff aims to help consumers build or rebuild credit by offering a $500 line of credit that can only be applied to purchases of financial education products and services at its online store.
The San Francisco-based startup, which launched to the public Wednesday after a six-month pilot, has raised $42.5 million in funding. Its backers include the NBA star Stephen Curry; Melissa Smith, CEO of the payments company Wex; and Teresa Ressel, former chief financial officer of the U.S. Treasury Department.
Customers can use the credit to make purchases from Kikoff, which sells financial literacy and personal finance books and courses. The topics run the gamut from budgeting to starting a business and are priced starting at $10 apiece to help users keep their payments affordable and credit utilization low. Kikoff reports payment activity to two of the three credit bureaus so that customeers can build a credit history.
“Consider it a credit card that can only be used at one store,” said Cynthia Chen, Kikoff's CEO and a co-founder of the company.
There are other credit-building tools on the market, such as Self Lender, and the credit card fintechs
Chen says Kikoff is different because it doesn't charge interest or penalty fees. It makes money off the difference between the prices it charges for items in its online store and the price it pays for them. Applicants are screened using anti-money-laundering and know-your-customer checks, and must provide their Social Security number and cell phone number. But they don’t have to share bank account details for credit analysis, which could suit customers who are hesitant to link their accounts.
Chen previously served as chief risk officer at Figure Technologies and held senior executive roles at Capital One and OnDeck. She grew up in Beijing, where she watched her parents borrow money to make large purchases and always repay their debt — but there was no credit system to reward their behavior. As a college student in the U.S., she worked hard at building her own credit.
The product quietly launched in December and gained users through word of mouth and app store searches. Chen says Kikoff has hundreds of thousands of users.
The company says it will use the recently raised funds to build out its technology and team and bring new products to market. The next step, says Chen, is developing other products that help customers improve their financial health, and eventually Kikoff plans to offer a deposit account and debit card.
