Untapped Investor Summit (Ryan Duitch, Co-founder & CEO of Arro Finance)

And why don't we move on? And without further ado, I want to invite up Ryan. I wanted him to share about Arrow and talk a little bit about your experience at our inaugural accelerator. It's not often that you get two that raise, you know, a million plus in your first cohort within a few months. So we're pretty proud of that accomplishment. But let Ryan come up and share a little bit about his experience.

Hello, everyone. Ryan Deitch ^CEO and founder of Arrow. As George mentioned, I was part of the first accelerated cohort. So I'll start by just sharing our story of how we got there, a little bit about what our experience was like, and then really what we're trying to do and the vision for the company. So it was in early 2021 that I started to come up with an idea, really looking at how broken the credit system is in the United States. At the time, I had just had my first idea. I had met George and and the MD at the time of the accelerator, and they brought me in as one of the cohorts to start help validating the idea out quite a bit. And at the time, we went through a Lean Stack program. Super helpful for anyone starting businesses and trying to validate concepts, but it essentially tries to put you through the process and the principles of how do you make sure this is a business that's really worth building and how much validation can you do for as lean and cheap as possible? And I had been toying with a handful of ideas around the credit space, and there's one line that stood out to me that I hope will be an important part of both my trajectory as well as others. But it says, love the problem, not the solution. And I was looking at a handful of problems. And as I started going through the research process, interviewing consumers all over the country, what I found is how deep this problem really is. The research really opened up a lot, finding lots of fear and anxiety for consumers all over the country. We were looking at thin file, new to credit and subprime individuals. And people are afraid, afraid to overspend, afraid of the debt trap. They don't trust financial service companies. Everyone's out to get me. We kept hearing, they're just trying to find ways to get my money. And when we looked at it, these weren't interviews. These were therapy sessions. People opening up emotionally, sharing things they don't talk about, asking for advice. And so we stepped back, and as part of this process, we were through the accelerator, recording interviews, sharing some of this with Colleagues going through this lean Stack experience, trying to document everything down. And when I pulled away from all of this, what I realized is the missing piece here is really financial literacy. You know, you heard Anji mention it earlier, but illiteracy is spread across the globe and in the US it's not taught in schools, it's not mandated. And as I looked and heard the stories, you know, people are making uninformed decisions because they don't know the basics. These are good people. They don't want to default, they don't want to be in this situation. But a lot of times when you're living paycheck to paycheck, you can only look so far ahead. It's hard to plan six months when you're struggling and worried about what's going to happen next month or on the other side. Maybe you're not in the system, maybe you're a college student, you don't really know what to do and you don't know who to trust. I don't know how many people know this, but this is unfortunately a story for many, many college students. I get my first credit card, I rack up my first thousand dollar debt. I realize a month later I have to pay it back and I start accruing interest and my credit score gets hit. So there's lots of different themes around. What do I know, what can I know, what should I know? And so we took a step back and said we've got some major systemic problems in the credit system. First, a lot of the people we're looking at can't get fair access. They can find some form of access, but it's usually high interest rates, high fees. It doesn't really help solve the deeper problems. And so we went out to tackle how can we treat anyone in the country, no matter what your background is the same as we'll call it a prime customer. And we solve for that by creating a new underwriting formula that essentially looks past someone's FICO score, looks at whether they have any income, and a handful of factors. And we created a model where we could approve anyone for a credit line that no one else could approve in the country. And that's how it begins is first we want to open up the door so that anyone can get access. We then want to make sure that that's truly fair. And so we're anchoring at interest rates that are consistent considerably less than any other provider out there. Because what we're really doing and what we're really seeking is trying to provide people opportunity. And the Tools that set them up to be successful. And so what we've created is a behavior engine. The first thing we ask someone to do when they get accepted for our credit line is set a financial goal. And if you do that, we increase your credit line. The next thing we ask is to complete some activities like learning about the basics of how credit works, how credit cards work, how the importance of credit scores, spending savings, and as you go through this financial literacy program that we've developed. And I am not updating the slides as I go here. Sorry, everyone, but I will quickly catch up with where we just were. The clicker was dropped down, the mouse is. Mouse is off. But so that's really good. Don't need the slides. But as people go through this experience and quick snag on the side. Here we go. The idea is that we're providing real opportunity and skill development. We are launching a credit card. So this is our first product. Why? Because we can both help people build credit by reporting their payments to the bureaus. Credit cards allow, from a business perspective, interchange revenue that allows us to discount some of our interest and other things in a handful of ways. And most importantly, from a consumer behavior perspective, psychologically, once you transfer someone money in many of the cash advance and other models out there, that's their money. Doesn't matter where it came from, doesn't matter how you pay it back. Psychologically, that's in my account. That's mine on a credit card. However, not only can we practice the true principles of, of revolving credit, but we can utilize this shared pool of money as the incentive to go through our literacy program. And so what we've created is essentially a new system that tries to tie behavioral science education and behavioral change directly to a financial product. What are we really doing behind the scenes? We are developing better borrowers. There is really no credit companies, credit products and lenders out there that are trying to focus on consumer behavior before they focus on the economics of their interest in credit product. And the reason why is because you learn a lot about people very quickly. What will they do if you give them opportunity and you give them the tools? Most companies in the industry are trying to predict what you'll do based on your path. When you look at this type of consumer, there's a lot of circumstantial and disadvantaged data. How do you know what someone can do when every month or two they're struggling and they can't get those opportunities? And so it's very easy to make judgments here. We try to judge in Real time data. And what I say is it's about 20% content, 80%. Behavioral science literacy provides a foundation for people to build upon to try to help break some of the systemic cycles and barriers that stop you from growing. But behavioral science and actions and actually getting people to implement that, that's how you really start to form behavior change. And so what we're really doing is capturing a very unique data set about individuals that people don't have data about so that we can build the Aero score. And the hope is, is that the arrow score can either compete or complement the FICO score at some point to show that for the next step stage of products for auto, for insurance, for mortgage, for others, we have behavioral data on consumers that want to pay back, that are great people but just can't get the chance. So they deserve to get a more preferable interest rate and a more preferable loan. And that is what we are truly doing behind the scenes, is developing hopefully a competitive model to fico. This will allow us to expand the credit box for other lenders so that there is both, both a direct to consumer business just as much as There is a B2B business down the line. You know, where we're really after is trying to change and disrupt a different credit path for people. This is a brand new concept. It has never been tried or proven before. We have spent quite a while now building our infrastructure. As George mentioned, we raised a round coming out of the accelerator, raised another round a few months ago to really get this off the ground. And I am happy to tell you all about it, happy to answer some questions and looking forward to meeting different people throughout the rest of the day.

Great job, Ryan. All right, my team is queuing up a question from Zoom, but any questions from here while we're waiting? Just curious, the name, Eric, what is that?

Yeah, so I will say for anyone naming businesses, we went through 1000 names. This took months. Actually, we had a different name when I entered the accelerator. We ended up choosing this because arrow has lots of connotations to it around a pointed journey, a trajectory you could use bow and arrow. You can use the signs of an arrow that point up that are, as we all know, the green arrow for stocks and everything alike. But it's really about a journey ahead that has, you know, it's not always easy. Bow and arrow goes up before it goes down to land, etc. And ours is the same in, you know, our model is this is not a true lending product where you're just given money, you are required to engage with us. And in case that wasn't clear, this isn't an optional financial literacy program. We are really a behavior engine that is using credit as how we get that behavioral data and that behavioral change.

Awesome. Thank you so much, Ryan.

Okay, cool. Thanks, everyone.

All right, I promise on the next one. I'm just trying to manage time here because I know there's a speaker that sometimes goes over, and his name is George, so.