Backed by PayPal founder Max Levchin, fintech company HMBradley offers a hybrid savings and checking account and brags that it has an interest rate up to 3%.
The model has proved popular and on Tuesday, the Santa Monica-based digital banking platform HMBradley announced it has raised $18.25 million in Series A funding in a round led by Acrew Captial.
<p>Zach Bruhnke, HMBradley's co-founder and CEO, said in an interview that he didn't foresee a Series A round happening so quickly after the platform launched on March 30, but deposits have grown faster than expected.</p><p>"I think we were very much prepared for this to be a slow burn," he said. "We were going out saying we're going to build slow and steady."</p><p>HMBradley gives up to a 3% interest rate on savings to users who save 20% or more of their direct deposits each quarter no matter how much money they earn. There is a tiered system, so the higher percentage of your deposits you save, the higher the interest rate will be, up to 3%.</p>
<img lazy-loadable="true" src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDgwMzI2Ny9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxMTY5MDkzN30.e-FoZMjup0MV4s0YquKRFXT4_yLXeRuW2pZ1MbF1fBY/image.jpg?width=1500&coordinates=597%2C1%2C597%2C1&height=2000" id="33317" class="rm-shortcode" data-rm-shortcode-id="e1fb9f2e4c3803197f28875e73a596df" data-rm-shortcode-name="rebelmouse-image" alt="Zach Bruhnke" />
HMBradley's co-founder and CEO Zach Bruhnke
<p>The fintech firm said it has received over $90 million in deposits and its users have an average account balance of $30,000, while transaction volume has grown to over $110 million.</p><p>"Our customer base, they like to be rewarded for having good behavior and that's exactly what we're doing," Bruhnke said. "You save more, you earn more that's a big part of the focus."</p><p>The company differentiates itself from other fintechs by charging fees, trying to compete with customers who would normally bank at traditional banks rather than other digital banks that don't charge fees.</p><p><span></span>Bruhnke said the product has appealed to customers who are focused on saving and being rewarded for it with higher interest rates.</p><p>"What we didn't expect is how fast it would catch on with that audience," he said.</p><p>The Series A funding will help the company add to its growing employee roster, which expanded from 13 to 25 employees. The company recently hired Ben Coffman, who built the Capital One mobile app, and Saira Rahman, a former AVP at Alpine Bank and head of West Coast derivatives at B&F Capital Markets.</p>
<p><br/>The money will also be used to build new tools for customers like bill pay and remote check deposit. Bruhnke also wants to help customers understand their cash flows to make better financial decisions.</p><p>Acrew Capital was also an early investor in Chime, another digital banking service, based in San Francisco.<br/></p><p><em>Editor's note: This story has been updated to omit Finix and Deserve as funders in the Series A. They were not. </em></p>Related Articles Around the Web
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PayPal Holdings, Inc. announced Thursday it will be transferring money to two L.A. firms as part of a $50 million commitment to eight early-stage, Black and Latinx-led venture capital funds.
Slauson & Co., the new fund from PledgeLA chairman Austin Clements focused on people of color, women and LGBTQ+ entrepreneurs; and VamosVentures, the Latinx consumer-focused, early-stage fund founded by Marcos Gonzalez, are both receiving undisclosed investment amounts.
<p>"For a small fund, this is critical," Gonzalez told dot.LA. "Welcoming PayPal into the VamosVentures family will provide insight and resources in a variety of ways. For example, deal referrals, input on diligence of companies we're looking at in the fintech space, and possible business development support for our portfolio. More broadly, we expect to benefit from more general insight on trends and connections to folks in the ecosystem that we might not otherwise be able to access."</p><p>Gonzalez said he thinks it is significant that Los Angeles is the only city where PayPal chose to invest in more than one fund.</p><p>"I think it shows that L.A. can be an epicenter for early-stage activity around diverse managers, founders and consumers," Gonzalez said. "More specifically, L.A. is a Latino city and we're working to increase the Latinx communities participation in the tech and VC ecosystem."</p><p class="shortcode-media shortcode-media-rebelmouse-proxy-image">
<a href="https://live.staticflickr.com/4001/4170669921_021a2a9881_b.jpg" target="_blank"><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vbWVkaWEucmJsLm1zL2ltYWdlP3U9JTJGNDAwMSUyRjQxNzA2Njk5MjFfMDIxYTJhOTg4MV9iLmpwZyZobz1odHRwcyUzQSUyRiUyRmxpdmUuc3RhdGljZmxpY2tyLmNvbSZzPTY5OSZoPWI2NzE5MmYwODE2YzQwN2ZiMTY5ZjExMjdjMTNmMWJjMjNkNWZhNjJjODA4YmUzODc4N2FkZTEzZmNkN2VjZjImc2l6ZT05ODB4JmM9MzIxODU3OTM3NSIsImV4cGlyZXNfYXQiOjE2MjE5NzY4MTZ9.TbIMvzMgjRrFC1MIgn_sO4wnIXPG988A_krHApWX6uU/img.jpg" id="48b1d" class="rm-shortcode" data-rm-shortcode-id="cde421879f65f78717ff196798bc61b4" /></a>
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<a href="https://live.staticflickr.com/4001/4170669921_021a2a9881_b.jpg"><strong>PayPal</strong> booth at LeWeb | Robert Scoble | Flickr</a>
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</p><p>Just 2% of VC investment partners in L.A. identify as African American or Latino, <a href="https://www.pledgela.org/" target="_blank">according to PledgeLA.</a> Nationally, a<a href="https://www2.deloitte.com/content/campaigns/us/audit/survey/diversity-venture-capital-human-capital-survey-dashboard.html" target="_blank"> 2018 Deloitte study</a> found 80% of investment partners at U.S. venture firms were white; 3% were Black and 3% were Latino. Just 4% of VC employees are black, according to a 2018 survey by the National Venture Capital Association (NVCA), an industry trade group.<br/></p><p><a href="https://dot.la/lots-of-talk-but-little-action-how-can-venture-capital-solve-its-whiteness-problem-2646188887.html" target="_self">Because of the insular nature of how startups get funded</a> – with a big emphasis on existing networks and warm introductions - the lack of diversity has major trickle down effects on which founders get capital. </p><p>In an effort to help solve <a data-linked-post="2646195778" href="https://dot.la/diversity-in-venture-capital-2646195778.html" target="_blank">the whiteness problem</a>, VC's like Clements have gone out on their own to start new funds, but raising a first time fund is never easy and has been a "herculean task" this year, <a href="https://dot.la/venture-capital-los-angeles-2648185121.html?utm_campaign=post-teaser&utm_content=ngk8nnoq" target="_self">according to the NVCA. </a>That's why the PayPal investment comes as welcome news.</p><p>"Through our investments, we hope to be a catalyst for positive change for people who face historic disparities in access to capital and opportunity," Clements said in a prepared statement.</p><p>While PayPal will be what Clements calls the "inaugural investor" in Slauson & Co., VamosVentures is further along, having already raised $25 million with two months left of fundraising to go, according to Gonzalez. </p><p>PayPal said it would also invest in <a href="https://c212.net/c/link/?t=0&l=en&o=2962196-1&h=2203840554&u=https%3A%2F%2Fnam03.safelinks.protection.outlook.com%2F%3Furl%3Dhttps%253A%252F%252Fwww.chingona.ventures%252F%26data%3D02%257C01%257Ctaywatson%2540paypal.com%257C24fb27c22d524ba4d11408d86c835b93%257Cfb00791460204374977e21bac5f3f4c8%257C1%257C0%257C637378658740144272%26sdata%3D%252Bp1sznGljs7YIB73mm%252FP9Ef%252BhHOfa0ygYwZpNVt2ZVI%253D%26reserved%3D0&a=Chingona+Ventures" target="_blank">Chingona Ventures</a>, <a href="https://c212.net/c/link/?t=0&l=en&o=2962196-1&h=3017905659&u=https%3A%2F%2Fnam03.safelinks.protection.outlook.com%2F%3Furl%3Dhttps%253A%252F%252Fwww.fearless.fund%252F%26data%3D02%257C01%257Ctaywatson%2540paypal.com%257C24fb27c22d524ba4d11408d86c835b93%257Cfb00791460204374977e21bac5f3f4c8%257C1%257C0%257C637378658740144272%26sdata%3DqeOCgMtjkHbPKXWv%252Fo8k4SiEfHUNo9I7%252FBzARlhYP5s%253D%26reserved%3D0&a=Fearless+Fund" rel="noopener noreferrer" target="_blank">Fearless Fund</a>, <a href="https://c212.net/c/link/?t=0&l=en&o=2962196-1&h=4109867380&u=https%3A%2F%2Fnam03.safelinks.protection.outlook.com%2F%3Furl%3Dhttps%253A%252F%252Fharlem.capital%252F%26data%3D02%257C01%257Ctaywatson%2540paypal.com%257C24fb27c22d524ba4d11408d86c835b93%257Cfb00791460204374977e21bac5f3f4c8%257C1%257C0%257C637378658740154266%26sdata%3D9LdnnY%252BCLTGn65%252FPzj5z0z%252FAEyaL3ddx94a02u%252FRkTM%253D%26reserved%3D0&a=Harlem+Capital" rel="noopener noreferrer" target="_blank">Harlem Capital</a>, <a href="https://c212.net/c/link/?t=0&l=en&o=2962196-1&h=2965451058&u=https%3A%2F%2Fnam03.safelinks.protection.outlook.com%2F%3Furl%3Dhttps%253A%252F%252Fprecursorvc.com%252F%26data%3D02%257C01%257Ctaywatson%2540paypal.com%257C24fb27c22d524ba4d11408d86c835b93%257Cfb00791460204374977e21bac5f3f4c8%257C1%257C0%257C637378658740154266%26sdata%3DooNZiKKH6Kn3eoJDASQye5a18Gc7o8xD2ASqVmgjztY%253D%26reserved%3D0&a=Precursor+Ventures" rel="noopener noreferrer" target="_blank">Precursor Ventures</a>, <a href="https://c212.net/c/link/?t=0&l=en&o=2962196-1&h=1643269006&u=https%3A%2F%2Fnam03.safelinks.protection.outlook.com%2F%3Furl%3Dhttps%253A%252F%252Fwww.zealvc.co%252F%26data%3D02%257C01%257Ctaywatson%2540paypal.com%257C24fb27c22d524ba4d11408d86c835b93%257Cfb00791460204374977e21bac5f3f4c8%257C1%257C0%257C637378658740164260%26sdata%3DB1h5I4927HBGc9u%252FGpMsUShmpDaej%252F%252B6M2NJ9LQuw%252F0%253D%26reserved%3D0&a=Zeal+Capital+Partners" rel="noopener noreferrer" target="_blank">Zeal Capital Partners</a>, and one additional fund as part of the company's commitment to invest $530 million to support Black-owned businesses, strengthen underrepresented minority communities and fight for racial equity and economic equality.</p>
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As one of the founding fathers of the L.A. tech scene, Brian Lee is used to having entrepreneurs pitch him on ideas. What does he look for? It's not so much a business plan or even an idea. He says he goes off a vibe.
That's how he ended up being the first investor in the deal-finding browser add-on Honey, which was bought late last year by PayPal for $4 billion in what ranks as the biggest acquisition L.A. has seen to date.
<p>The low-key Lee, wearing a baggy black hoodie, talked about that and other topics in a wide-ranging conversation in the decidedly un-sleek West L.A. street level office where he oversees BAM Ventures, the early-stage consumer-focused fund he co-founded in 2014. The onetime Skadden Arps attorney co-founded LegalZoom in his condo in 2001 and after that became known as the business guy celebrities go to to launch their consumer brands, such as Shoedazzle with Kim Kardashian in 2009 and The Honest Company with Jessica Alba in 2011.<br/></p><p>Lee also discussed whether Honest, where he stepped down as CEO in 2017 after the once high-flying unicorn raised a down round, grew too fast and what Moviepass, <a href="https://www.vox.com/culture/2019/9/23/20874031/moviepass-shut-down-explained" target="_blank">the widely mocked</a> movie subscription service he backed that folded last year, should have done differently.<br/></p><p><strong>How did you first find out about Honey?</strong></p><p><strong></strong>I gave a talk to some entrepreneurs at MuckerLab and George [Ruan] and Ryan [Hudson] approached me as I was coming off the stage and I really liked their vibe. I believe we were the first capital into Honey and then followed on to that investment, which was interesting because to be really honest – and I'm not sure how honest I should be – not a lot of venture capital firms took them seriously. It was tough to raise capital for that business, partly because they were just a browser extension. A lot of venture funds turned them down because they've never seen an extension company scale to that extent.</p><p><strong><span></span>When you say you got a vibe, can you explain what you mean? Was it really more of a vibe than what they exactly said?</strong></p><p>Yeah. That's what we invest in, we invest in people. There's certain criteria that we look for in founders, a proprietary kind of checklist that we go through to determine whether or not these are the founders that we want to back. </p><p><strong>Can you share what you look for?</strong></p><p>I can't without fear of being sued [Laughs].</p><p><strong>But can you share what about their vibe attracted you?</strong> </p><p>First there was this quiet confidence they had in spades. They knew exactly what they were building, and how they were going to get there. It gave us a lot of confidence to back them. Every time we met with them the numbers were growing, and we knew the future was very bright for Honey very early on. I thought they were very intuitive when it came to the next steps for what they were going to do. </p><p><strong>By nature of your business you have very successful companies and a lot of ones that don't work out. You were an investor in Moviepass, which got a lot of press. What did you see in Moviepass that appealed to you?</strong></p><p>It was disruptive, with great entrepreneurs. I really liked their approach. It's just the economics were never quite figured out. Moviepass is one of those ones I look back on and I still to this day think it should have worked. It's just that the model itself maybe shouldn't have been all you can eat. Maybe it should have limited how many times you could go, or when you could go, maybe not opening weekend.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjY4MzEzMS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYzMzc2NTgzN30.pNncDRGKo5PBpn8l975kHXwF0jD9q9M8B1N4bjZVHwQ/img.jpg?width=980" id="060a7" class="rm-shortcode" data-rm-shortcode-id="3a3d654aeab27bb0dd3b08f54dc7abbe" data-rm-shortcode-name="rebelmouse-image" />
<small class="image-media media-caption" placeholder="Add Photo Caption...">"Moviepass is one of those ones I look back on and I still to this day think it should have worked."</small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Shuttershock</small></p><p><strong>When you say the economics were not figured out, isn't that something you would want to have figured out before you invested?</strong><br/></p><p>Not necessarily. We invest in entrepreneurs. So long as the idea seems like a big idea we will invest and try to figure out the business model at a later date. I don't think anyone can tell you that they thought Google or Facebook would have been what they are today in terms of the monetization engines that they've created. They were out there building social networks or search engines. I don't think they ever really thought that the end result would be selling ads. I can't imagine [Google co-founder] Sergey Brin woke up when they started Google saying it was going to be the largest ad company in the world.</p><p><strong>Do you think that this emphasis on profitability being more of a focus now is detrimental?</strong></p><p>Yes and no. It comes in waves and that's the thing about venture capitalists in general. When it's time for growth they want you to grow at all costs and when things tighten up they want you to get profitable at all costs. It shifts like the wind and it just drives me crazy. For me, we just want to build great businesses and that depends on the business model. It shouldn't be macroeconomics.</p><p><strong>Another company you personally invested in as well through BAM was the luggage company Away. What did you see in that?</strong></p><p>I thought it was a category that was sleepy. It was old, and it was stodgy and this millennial brand was coming out of nowhere and taking up a lot of the mindshare of the consumer. I thought it was a great product, so I thought they could get big.</p><p><strong>The co-founder and CEO, Steph Korey, recently returned as the co-CEO <a href="https://www.theverge.com/2019/12/5/20995453/away-luggage-ceo-steph-korey-toxic-work-environment-travel-inclusion" target="_blank"><u>[after an expose published in December in the Verge detailed a toxic work culture</u></a>]. Did you think that was the right move?</strong></p><p>Absolutely. Founders always make for the best CEOs at least until the time comes where the company scales beyond the founder. Sometimes you get those rare instances where the founder can be CEOs forever. You get your Michael Dell's and your Bill Gates and your Mark Zuckerberg but that's rare. Usually the CEO will get to a certain stage and you have to bring in professional management at some point. </p><p><strong>Were you concerned about the culture at Away? There were some serious allegations raised.</strong></p><p>I don't know much about that. I can't comment on the culture of the business. I haven't spent time there.</p><p><strong>Is that something you focus on at your level, the culture of companies? </strong></p><p>No, I would say that we don't really focus on the culture of the company that we invest in because there is no company when we invest. Typically, we like to invest in entrepreneurs that we think will create a great culture. We don't sit there and say we want to pick an entrepreneur that will create a horrible culture.</p><p><strong>As you go forward with all these companies what lessons do you take forth from your time at Honest Co.?</strong></p><p>We love mission-driven businesses, when people are very passionate about the company they work for. I believe in great teams, and I think we had a wonderful team at the Honest Company that really helped build that business. Mostly, singular purpose is a great thing for a business. </p><p><strong>Do you think that you were not focused enough there and were trying to do too much?</strong></p><p>Maybe a little bit, but I think we built the business with great size and scale and I think we brought in professional management at the right time. </p><p><strong>Did you grow too quickly?</strong></p><p>No, I don't think so. I think we grew at the pace that was allotted to us. I mean the consumer speaks volumes and they awarded us with growth.</p><p><strong>What do you mean you grew at the pace that was allotted to you?</strong></p><p>If the consumer is demanding your product then you're going to grow. The consumer fell in love with the Honest Company's products and mission, and we had great success.</p><p class="shortcode-media shortcode-media-rebelmouse-proxy-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vbWVkaWEucmJsLm1zL2ltYWdlP3U9JTJGODAzNyUyRjc5NzU2NTI2MjlfMDNhNzZkYTA2MF9iLmpwZyZobz1odHRwcyUzQSUyRiUyRmxpdmUuc3RhdGljZmxpY2tyLmNvbSZzPTUyMSZoPTdlZTljM2ViYTc3Y2MxZjQ4OTczMzY4MzE2ODIwZjJkODdlMzBjMDQ2ZjZkN2NmMmNmOTk3Y2Y4MzNkNzIyOTEmc2l6ZT05ODB4JmM9MjU5Mzc0OTE1NSIsImV4cGlyZXNfYXQiOjE2Mzc3NzcwOTJ9.KNjjb3Fr2ciisMEP5PelzR1jio9md36c3lanKRnN8B0/img.jpg" id="8f87e" class="rm-shortcode" data-rm-shortcode-id="4d16702f5ddffe2b4906fac43a0a05b4" alt="" />
<small class="image-media media-caption" placeholder="Add Photo Caption..."> Brian Lee and Jessica Alba, founders of the Honest Company, at Disrupt Conference in 2012.</small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">
<a href="https://live.staticflickr.com/8037/7975652629_03a76da060_b.jpg" target="_blank">live.staticflickr.com</a>
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</p><p><strong>When you're coming up with new products, where do you get your ideas from?</strong><br/></p><p>Everywhere. Ideas come to me at the most random times. I'll give you a typical story, for let's say<a href="https://artofsport.com/" target="_blank"> <u>Art of Sport</u></a> [which Lee co-founded in 2018]. I went to the drugstore and I was looking at sunscreens, which on a mass level is dominated by three brands and the number one SKU for each one of those is the sport version. The sport is in bigger font than the brand logo, so I was thinking to myself, "Are people buying the brand or are they buying it because it's sport?" I walked around the corner and I was looking at the deodorants and a third of them were sport related. I went to the body wash section and it was the same thing. But what occurred to me was that none of these brands – although they're great brands – were authentic sports brands. Old Spice was started in 1929, and now it's Old Spice Sport. It just didn't feel very authentic to me so I thought it was time that an authentic sports brand entered this category. </p><p><strong>You were involved in LA's tech scene very early. How do you think it will be different in the next couple of years than it has been for the last decade?</strong></p><p>It's a great question because even when I started LegalZoom 20 years ago – and I started it out of my condo – there was zero venture capital in the city, no angel investors and there were probably five engineers and we got lucky because we got one of them. In the earliest days of the L.A. tech ecosystem you had to fend for yourself. You had to build a profitable business very early because there was no capital. So anytime you look at early stage companies in L.A. back then they're monetization engines. LegalZoom was profitable really from day one. I would argue it wasn't until Snap came into the picture that we finally got some capital into the city, where it was more a question of scale, as opposed to monetizing immediately. That really changed the landscape for all of Los Angeles. Going forward, more and more capital is coming into the city which attracts more and more talent. I think the ecosystem is definitely taking hold. </p><p><em>This interview has been condensed and edited.</em></p>
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