Karma is Good: 2 FinTech Entrepreneurs Invest in Women
Both women were working in finance on opposite ends of the country—one in San Francisco, the other in New York– and met on Skype in 2012 through a friend’s introduction.
Since then, Catherine Berman and Yuliya Tarasava, co-founders of CNote, an online impact investing platform that allows anyone to become an investor for social change, have seen their vision realized that “finances should be an instrument of change.”
Launching in 2016, with $10 million from investors, CNote offers financial products that drive dollars to financially underserved communities across the country, including women-owned small businesses. In a short time, they have been responsible for creating and maintaining 1,00o jobs and offering millions of investment dollars to women in businesses in low income communities.
Backed by Y Combinator and the winner of the SXSW fintech category in 2017, CNote was one of 40 companies selected out of 2,000 applications to present at CB Insights recently. CNote’s flagship product was the first high-yield impact product to be qualified by the Securities Exchange Commission for mass market.
“Earn more with good karma,” is the lead phrase on the company site, alongside a photo of a pink piggy bank.
Berman says the idea for CNote was three-fold. “We wanted to have a competitive return, and have investors’ dollars work. We wanted simplicity; so many feel disenfranchised from finances. And we wanted positive social impact.”
With products such as CNote Savings and other financial platforms, CNote allows everyone to invest in Community Development Financial Institutions—or CDFIs—which are community lenders that provide loans and financial services to underserved markets and populations. Available now in 50 states with more than 1,000 community investors, Berman says CNote investors have a 40 times better return on their savings without fees or a minimum.
“The name of the company is for a $100 bill because every dollar is a source of energy,” Berman says. “It can be used for good or evil. You can move mountains and you can affect change for the better.” The C in the company name is also about co-founders and community, she says.
According to a recent survey from the Federal Reserve, only 20 percent of small employer firms are women-owned. These women-owned businesses receive just 2 percent of all venture funding, despite owning 38 percent of all businesses in the country.
Tarasava, cofounder and chief operating officer, was born in Belarus, studied economics and math in school in the then former Soviet Union and became interested in finance. In 2004, she moved to the U.S.—knowing no English—and earned her masters in finance from Fairfield University in Connecticut in 2007.
Working on Wall Street, Tarasava started her career designing investment solutions for the global asset management firm AMG Funds. She later joined the wealth management boutique Summit Rock Advisors to develop the firm’s risk management framework.
From 2014 to 2015, she lived in Nairobi, Kenya, working with the Acumen Fund. “I became inspired by everything I had seen there,” she says.
She moved home to Belarus and started chatting with Berman about ways to launch their nascent idea for social impact investing. In March 2016, she moved to Oakland, Calif. where together they incorporated CNote.
Berman’s path to CNote started after she graduated from Boston University in 1997 (not in finance), and went on to earn her MBA from Oxford University in the U.S. in 2006. Along the way she created three startups, Global Brigades, Diversity Recruitment Agency and the Oxford Women in Business Network—because there wasn’t one.
Berman then returned to the U.S. and was Managing Director of Charles Schwab where she led a strategy division focused on the future of finance incorporating behavioral economics and predictive analytics.
“We don’t look like today’s finance executives, “ Berman says. “Most people expect a very different persona and we overcome that every day,” she says.
Building credibility quickly was important, she says, as it is also important “to build this future and see strong women leaders in finance.”
A strong driver for the founders of CNote is increasing capital access for women in financially underserved communities with a mission to create a more equal and inclusive economy for everyone. CNote has a borrower story program where small business owners show the impact investments can have on women business owners and communities.
“One interesting thing is showing people that going after two goals is possible: create a financial product and create impact,” Tarasava says.
Berman says looking toward a goal of $2 billion in investments, she is pleased that the pair did what they said they would do. “We created financial instruments that do good and do well.”
And yes, the process to creat CNote was “super scary,” Tarasava says. But better together.
“To have a co-founder go through the process with you is so much more exciting, interesting and fruitful to share the pains and joys and everything that goes along with that,” says Tarasava.
Berman adds, “As co-founders, the key is our shared values, open communication and respect.”
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