Today, we are excited to announce that earlier this year we welcomed Citizen Impact to the PollyLabs portfolio!
Why Did We Back Citizen Impact?
With one solutions, Citizen Impact solve huge two problems - one with huge market potential and one with profound societal impact
CitizenAI reduces bad debt for lenders while helping families and small businesses drive financial resilience. Their AI-powered platform identifies at-risk borrowers early and provides personalized intervention strategies, significantly reducing the likelihood of default and improving overall portfolio health. Throughout this process, they are offering tailored financial recovery plans and support, helping individuals and small businesses improve their financial stability, increase their income, and build long-term resilience.
Public Sector Wisdom Meets Tech Expertise
Citizen Impact was founded by Dganit Biederman (PhD), who has dedicated her life to helping families build long-term financial stability and independence. She spent over two decades testing and implementing innovative models for financial empowerment in the public sector. With her unmatched insight, she decided to find a way to bring tech to these worlds so she can bring scale to solutions she saw working. Into this fold came Yinon Brosh as Co-Founder and CTO, a highly accomplished R&D executive with specialized expertise in data management, privacy regulation, and security in large, regulated systems.
This combination of "problem expert and tech expert" in the founding team creates a powerful synergy, blending deep domain knowledge with cutting-edge technological capabilities.
Initial Intrigue Turns to Conviction
We met Citizen Impact about a year ago and were captivated by their vision, impressed with the team and excited about their alignment with our investment thesis. Our team knows the financial inclusion space very well and is aware of the incredible market size (and market failure) that fuels such opportunity. In the year since we last met, they've demonstrated:
Exceptional traction: Growing from 350 households empowered in 2023 to over 1,000 currently, with projections to reach 1,500 by year-end.
Promising proof-of-concept results: Over 80% success rate in field research, with a 25% conversion rate and >20% income increase for 80% of participants.
Remarkable resilience in the face of adversity: Through the past year, Citizen Impact was able to repurpose their offering and capabilities to serve thousands of households, showcasing their adaptability and commitment to their mission.
Witnessing this remarkable progress and potential, we made the decision to back Citizen Impact's mission through our FRF flexible capital fund. Citizen Impact innovative approach is a prime example of the transformative potential of technology in the underserved-yet-profitable market niches we seek. It's also a textbook example for why we're so bullish about financial inclusion opportunities
Financial Inclusion: The Catalyst for Other Sectors
Citizen Impact is a fintech startup for traditional investors. For Impact Investors, Catalytic Donors, and Impact Practitioners - it can also be categorized under a financial inclusion "tab" - which is an area we are very bullish on.
Financial inclusion is the provision of affordable, accessible, and appropriate financial products and services to individuals and businesses, regardless of their income level or social status. It's a critical component of equitable growth - access to financial services is what allows people and businesses to grow and prosper. The ability to take a loan for school or for an asset allows people to grow, insurance gives people more resilience to weather a shock, and investment/retirement products give people the option to enjoy the compounding multiplier of money well earned.
Financial inclusion presents an enormous commercial opportunity alongside its potential for social impact. The sheer scale of the underserved market is staggering: with approximately 1.4 billion adults globally remaining unbanked*, there's a vast untapped customer base waiting for innovative financial solutions. This opportunity extends beyond individual consumers to small and medium enterprises (SMEs), where the global credit gap stands at an astounding $5.2 trillion annually.
The rapid digitization of financial services is further accelerating this opportunity. Take the digital payments market as an example: it's on track to more than double from $89.1 billion in 2021 to $180.4 billion by 2026***, growing at a compound annual rate of 15.2%. These figures underscore the massive potential for companies that can effectively serve these underserved segments.
We believe there's an enormous opportunity in addressing the barriers that prevent traditional financial institutions from effectively serving underserved markets. By developing innovative solutions that help banks and other financial players reduce risk, lower operational costs, and better assess creditworthiness in these segments, companies like Citizen Impact can unlock tremendous value. These solutions not only improve financial institutions' bottom lines but also position them on the right side of commercial history (which is also good for business through brand equity, employee retention, etc).
We didn't define financial inclusion as its own "big bet" (our fancy name for focus area), because we don't believe it's its own thing; it's something underpinning every other sector or impact outcome. And indeed - our three first portfolio companies are either directly financial inclusion related or very close to it.
As we progress with PollyLabs' journey, we will continue to codify and unpack the flavors and characteristics of financial inclusion investment, and will make it as clear and transparent as possible so more investors can consider backing this space. In the meantime, if you would like to learn more about Citizen Impact or our other investments in space - send us a line at hello@polly-labs.com.
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