Founded by Catherine Berman and Yuliya Tarasava, CNote is a California-based fintech startup that tries to get people to make money and do good at the same time. CNote Savings enables users to earn up to 2.5% annual return while investing in affordable housing, women, minority entrepreneurs and other communities. The company partners with Community Development Financial Institutions (CDFIs) that lend money to underserve communities with financial needs.
L'Atelier: What's the idea behind CNote?
cnote: do good with your money
Yuliya Tarasava: We have built CNote thinking of the relationship people have with money. Doing some preliminary research, we have found that a lot of them experience frustration when it comes to finance, and they are globally intimidated by financial products. Historically, many financial products were created without real people input. I was involved in this process on Wall Street, creating "sellable" financial products based on trends and often only available to the wealthy few, most likely older white males who control the wealth. But the time is changing: today in the United States, women control more than half of the investable assets and we are living through a big shift of wealth into the hands of millennials. We wanted to create products that work for both genders and inclusive of all, irrelevant of income or wealth.
Frustration and intimidation are two of the most common feelings when it comes to money.
So the whole idea was to change how financial products were created, because we believe that finance can be redesigned. When we started a little bit more than two years ago, the mission was to create financial products with competitive rates that deliver social impact in a human way. The first product we decided to launch was a saving alternative. The market research we did before building the company made us realize that people don't think of themselves as investors: they don't feel empowered, or they think they don't know enough, so they stay away from the financial world. But the majority of people have a savings account, and CNote is a very simple way to do something good with your money.
How can you deliver financial and social return?
CNote is a way to support women and minority-owned businesses while making money. With a CNote savings account, people earn a 2.5% interest. We don't charge users any fees, and actually only make money by retaining the funds in excess from what has been invested in CDFIs. Last year, the dollars invested in CNote helped create or maintain more than 800 jobs, fund over 120 small businesses and entrepreneurs, and a third of (y)our investment went to low or middle-income communities. We deployed 4.5 million in these communities. Making money and increasing economic opportunity for others aren't incompatible. And this how we need to run businesses today: thinking about users, diversity, quality, social impact, ... Winning an award in the fintech category at SXSW last year and being recognized on such a big stage was a big milestone to highlight the whole concept of social entrepreneurship.
How to become an impact investor?
How do you get people involved in CNote?
People don't trust themselves with financial decisions, so they are looking up to a trusted source for ideas
Our user research shows that people don't trust themselves with financial decisions, so they are looking up to a trusted source for ideas. We have found that if you have heard three times about a product or a service, and let's say at least one time from a friend, you are more likely to check it out and try it. Most of our users are being referred by friends, or have read/heard about us in media they trust, such as Forbes or TechCrunch.
People don't wake up in the morning thinking about money decisions (or at least they don't want to), so we try to easily integrate with other financial decisions they are already making, like when they are deciding what to do with their tax refund or bonus. We are trying to make it as easy as possible for them to eliminate any frictions in the process. CNote mostly improves people's relationship with money because they see where it is going. They get their impact report, they understand how their money is deployed, and they see the stories of the entrepreneurs they are helping. 30% of our users come back and do more than one investment.
Who is investing ethically today?
CNote savings product is currently only available within the United States, and the user base is quite diverse. We have users from over thirty different states: half of them are female (and as a female founder, I am personally very proud of this balance), and over 60% are millennials. So far, we have experienced that women and the younger generation are more inclined to invest their money with impact. This is also what studies suggest. Another category of people aware of impact investing would be older people: mostly women, but also men who have already earned money, have a good asset base and can/want to do bigger than just charity. The "invest locally" movement is also gaining force: people who like their neighborhood coffeeshop or their local grocery store and are already spending money there might also want to invest in these businesses to contribute to their community in a deeper way. The role of small businesses in local communities can not be overstated. There is this beautiful story of a restaurant called "1300 on Fillmore" in San Francisco Fillmore district, the neighborhood that used to be known as the African American epicenter of the city. Its owner Monetta White has hired local people to revitalize the community and invested in the area, including some educational programs for its youth.
Is Silicon Valley a great place for social entrepreneurs?
Social enterprise is typically defined as the one that works on solving social problems. To me, every business should be created to solve a problem, a pain point for its users. Starting a business here in Silicon Valley certainly gives you access to mentors, capital and expertise, though in today's world, you don't have to be here to create successful ventures.