Bags, a small business loan discovery and management platform, announced today the close of its $2.5 million seed financing round as part of its continued effort to increase affordable funding options for diverse and women-owned businesses.
The fintech company’s round was led by Slauson & Co with participation from Schultz Family Foundation’s Entrepreneurs Equity Fund, following on previous investments from Altrinsic Global Advisors and angel investors Tim Armstrong, Owen Van Natta, and Edith Cooper, among others. The funds will be used to expand the capabilities of the Bags platform with debt management features and data infrastructure solutions for lenders.
There are 9.2 million minority-owned small businesses and 11.7 million women-owned small businesses in the U.S., and these segments are fast growing. Yet 99% of businesses will never raise venture capital, and, according to the Minority Business Development Agency, minority-owned businesses are less likely to be approved for financing than white business owners with the same annual receipts. In the current rising rate environment, diverse and women-owned businesses need access to fair funding that is hard to find through existing channels and unavailable from traditional institutions.
With Bags, diverse business owners discover the best non-dilutive ways to secure funding. Bags helps entrepreneurs get the working capital that they need, understand the implications of debt financing, and manage their repayment process, all with lenders that have a vested interest in supporting the community the business aims to serve.
“Access to capital is a core part of long-term small business success, and our mission is to provide underserved businesses with a clear path to fair financing with the tools they need to manage it. We help diverse folks avoid predatory lending by meeting them where they’re at, in a way that they relate to, and with what they need,” said Bags CEO Daniel Taylor.
The platform is thoughtfully designed to reduce time and friction in the loan application process with integrated, contextualized education and detailed guides for earning loan approvals to secure the bag. Bags is committed to providing only the best options, pre-qualifying businesses for loans from mission-driven lenders, including many non-profit CDFIs with a commitment to put cash in the community.
“The Bags team has a deep commitment to fair and flexible financing for millions of small businesses, and it shows in their early results. Entrepreneurs choose Bags for their relatable brand and elevated user experience that alleviate anxiety and mistrust in access to capital, and they fill a key need toward a future where small businesses can compete and serve the nuances of the communities they are a part of,” said Austin Clements, partner at Slauson & Co.
Based on data from the Congressional Black Caucus, the median net worth for Black business owners was 12 times higher than for Black non-business owners in 2019. According to the Hispanic Wealth Project, Latino business owners have a median net worth five times that of Latinos overall. Growth in Latina-owned employer businesses accounted for nearly all (93%) of the growth in women-owned employer businesses between 2017 and 2018. These data show the power of entrepreneurship to advance wealth building among diverse populations, and the Bags mission is to increase access to entrepreneurship to create stronger local economies, better jobs, and generational wealth.
Since 2021, Bags has helped hundreds of business owners get 100% free access to the right financing for their company. The platform includes lending options from $10,000 to $5 million, with industry-low interest rates and flexible terms. With funding approval rates for entrepreneurs connected through the platform far outperforming industry benchmarks, Bags has helped put over $5 million into small businesses since 2021, including lifestyle luxury brand M65 Studio, founded by Anthony Hendrickson, and Droplet, a wellness beverage brand created by Celeste Perez.
The seed round brings total funding for Bags to $3.5 million.
To learn more about BAGS and the work they are doing to help diverse business owners have an equal shot at success through access to capital, visit their website SecureBags.com or follow on social media.
Source: Black Enterprise