How Jay-Z’s Fintech Investment Could Inspire Music Industry Innovation
Source: Forbes, Andrea Zarczynski
Photo: LOS ANGELES, CALIFORNIA – JANUARY 25: Sean Combs and Jay-Z attend 2020 Roc Nation THE BRUNCH on January 25, 2020 in Los Angeles, California. (Kevin Mazur/Getty Images for Roc Nation) (GETTY IMAGES FOR ROC NATION)
There is a new startup expanding the financial technology industry, and rap icon Jay-Z’s Marcy Venture Partners (MVP) is a key investor. Los Angeles-based Perch Credit, a free credit score-building business founded in 2019, recently closed its seed investment round of $2.5 million and launched a new app.
Perch Credit CEO Michael Broughton and CTO Ayush Jain co-founded the company to help young adults quickly build good credit scores by tapping into non-traditional data points. Recurring payments like rent and Spotify, Netflix NFLX 0.0% NFLX 0.0% NFLX 0.0% and Hulu subscriptions common among young adults are used as credit history to improve user scores.
MVP, which was co-founded by Roc Nation co-founders Jay-Z and Jay Brown with venture capitalist Larry Marcus, is enabling Perch Credit to automate credit score building and offer free access to other financial and educational tools. With direct ties to the music industry, the firm also positions Broughton and Ayush to develop new fintech solutions specifically designed to support young recording artists.
“Perch is leaning into its network…being connected to Marcy, Citi, Softbank and other leaders in this space, we are able to truly put our ear down and communicate with our potential users,” Broughton says. “There are so many people who need access to credit–from young artists to aspiring entrepreneurs–we want to help enable these people in a modern, free and fast way.”
Broughton, now 21, was inspired to create Perch after facing financial difficulty entering college at USC. As one of seven children in a military family, he lived in Japan and South Korea from ages eight through 16. When he moved back to the U.S., he was unfamiliar with the credit system and one of the first members of in his family to apply to college in the states. Soon he discovered that he was $10,000 short on tuition but denied by loan programs. Eventually he settled the difference with the university and was able to enroll in courses.
The first investment that Perch received was a $250,000 check from MVP. The co-founders enjoyed hyper growth last year and entered Y Combinator (YC), one of the world’s largest incubators for companies including Airbnb, DoorDash and Twitch. The entrepreneurs built the app last summer and have since been collaborating with the music industry’s Roc Nation as well as record producer, songwriter and record executive Tahj Morgan (JetsonMade).
Additional Perch investors include Citi, Softbank Opportunity Fund, Concrete Rose and Village Capital. Before launch, the app had waitlist of 25,000 prospective users. The service launched on iOS in late January and quickly made its mark on Jan. 26 as the number four Product of the Day on Product Hunt, a product sharing and discovery platform that features comments and a voting structure similar to Reddit.
“Too many 18-24-year-olds lack access to the right financial tools and the impact of this problem compounds for years, sometimes decades, into adulthood,” says Sean Mendy, Managing Director at Concrete Rose. “The Perch team is building something exciting that will close this significant societal gap…Michael is an inspiring and exceptionally talented founder motivated by his lived experience, and we’re looking forward to supporting him and Ayush as they build disruptive products to meet the needs of this growing and underserved Gen Z market.”
By pulling a user’s existing payments and subscriptions to demonstrate responsibility to U.S. credit bureau partners, Perch quickly establishes his or her credit history. According to Broughton, users typically notice improved credit scores in less than 30 days versus traditional credit card and loan-based methods that typically take between six and eight months on average for the same results.
Today Perch has more than 3,000 users with 1,000 additional people invited to sign up each week. The wait list is also still growing, and looking forward, the company’s first major milestone will be connecting more than 100,000 users. Broughton and Jain are optimistic about realizing their goal considering that Jain, a computer science student at the University of Southern California (USC), is already a successful entrepreneur who co-founded a drone delivery company, DronesDash, at age 15.
“Michael and Ayush, the founders of Perch, are both tenacious and adaptive entrepreneurs working to solve a really important problem in the financial wellness space for Gen Z,” said Marcus, also a managing director at MVP, in an announcement.
Broughton and Jain are preparing to launch a YouTube series around the topic of financial inclusion and literacy, growing trust in new fintech products along the way.