From startup to acquisition: Zuben Mathews on Brigit’s social impact journey

In late January, Upbound Group completed its acquisition of Brigit, a leading financial health technology company. This deal brings together Upbound’s established brands like Rent-A-Center and Acima with Brigit’s digital platform that offers earned wage access, credit building products, and financial wellness tools. The combined company now serves approximately four million active customers, including Brigit’s impressive base of over one million paying subscribers.

I’m thrilled to welcome Zuben Mathews, co-founder of Brigit, to our podcast today. Zuben continues to lead the Brigit team as they now operate as a business segment within Upbound Group, alongside his co-founder Hamel Kothari.

In our conversation today, we’ll explore the strategic vision behind this acquisition, how Brigit’s technology will enhance Upbound’s existing services, and what this means for millions of Americans who have been traditionally underserved by mainstream financial institutions. We’ll also discuss how Brigit’s proprietary cash flow underwriting technology and machine learning capabilities might change the landscape for accessible financial products.

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5 big ideas

1. Financial Health Technology with Social Impact

Brigit was built with a dual mission of creating social impact while building a profitable business, focusing on helping Americans living paycheck to paycheck.

“The two core focuses that both Hamel, who is my co-founder, as you mentioned, and I have always had, is to truly make the biggest impact we possibly can leveraging, indeed, the cash flow technology… to this segment of the population that, unfortunately, is the widest segment of the population in the United States. And for us, we wanted to get to a point where it build an enduring business while doing that.”

2. Cash Flow-Based Underwriting as Innovation

Brigit’s primary technological innovation is using cash flow data instead of traditional credit scores for underwriting, creating more inclusive financial products.

“We only for underwriting use cash flow, so that someone’s income, volatility of income, historical spending and borrowing pattern, all of it changes in real time… not using FICO or credit scores, because I think that’s archaic. It’s probably great for a million dollar house in Manhattan. Not so good when you’re living in such a state of financial stress.”

3. Strategic Acquisition for Accelerated Impact

The acquisition by upbound group was motivated by the desire to scale Brigit’s impact faster than would be possible independently.

“How do we have the largest impact at the fastest way possible?… It’s a lot of question about being able to, quote, unquote, buying time. I mean, I would always argue time is more important than money, most valuable asset.”

4. Maintaining Independence Post-Acquisition

A key aspect of the acquisition was structured independence for Brigit to preserve their culture and speed while gaining the benefits of scale.

“The reality is, at least for the near term, near term being two years, we’ve got so much independence, included documented as part of the M&A agreement. So that’s another reason, one of the reasons why we want to do this, we have that have the ability to leverage the mothership, as you called it, but also be independent.”

5. Proving Financial Inclusion Can Lead to Successful Exits

The acquisition validates that fintech companies focused on underserved populations can achieve meaningful exits, potentially inspiring more entrepreneurs in this space.

“If company, if exits, help entrepreneurs think that there’s an opportunity to build a socially impactful company and actually have a worthwhile financial exit in building enduring companies… If one entity will come up because they heard about Brigit and the impact that we’ve had that will make me, honestly, super excited.”

Read the transcript (TS Pro subscribers)

Strategic Reasoning Behind the Acquisition

Sure. I mean the two very important, very distinct questions. Maybe I start with one at a time. I mean in terms of why. Now, look, there’s no perfect time for when to decide to sell, quote, unquote, what you’ve built over a period of time. The two core focuses that both Hamel, who is my co founder, as you mentioned, and I have always had, is to truly make the biggest impact we possibly can leveraging, indeed, the cash flow technology. So I appreciate that mention as well to this segment of the population that, unfortunately, is the widest segment of the population in the United States. And for us, we wanted to get to a point where it build an enduring business while doing that. So one of the things we’re able to do, according to one of our investors, was save a billion dollars for this core user base from overdraw fees and other predatory fees.

Brigit’s Mission and Business Success

One of the ones that matters most to every single person at this company. We truly built this, as I mentioned, to have a social impact, but also try to show that while doing so, you can build an enduring business. So we’ve actually been profitable for the last couple of years, just only using cash flow. And for those who don’t know what we do, we’re a financial health app that give money to people between paychecks to help manage the volatility between paychecks, build their credit scores through savings and a whole bunch of financial literacy tools all as a package. So we’ve come to a point where we thought we’d reached a certain amount of scale I’d mentioned. So on revenue, we’re going to be 200 million plus this year. We’re only a team of 100 people built real technology. So we, fortunately were able to check those boxes, and the question came up, and this was initially through looking at partnerships, not so much at an acquisition. How do we have the largest impact at the fastest way possible? And again, as I mentioned, there are a couple of strategic partners we’re talking to, again, not so much from an acquisition standpoint. And those conversations quickly changed from Hey, can we take our core technology and have a wider impact through partnerships to actually being an acquisition. So that’s kind of the why. Now again, it’s, there’s no, there’s no specific answer and say, Hey, this was all planned. We had a two year vision, year vision, to try to sell, sell our company. It was more, definitely more organic.

The second part of your question, Zack, is, why upbound. So that’s look there the number of reasons. First of all for us, as I mentioned, it really starts from having the larger social impact and our team and people and the one of the things that really took us back was a presentation the CEO Mitch, who’s been at the company for 40 years in many different forms, starting from a store manager all the way up to the CEO, and the way he pitched, the ability to say, hey, he understands this customer segment, because a lot of people just don’t. And I think the fact that both he and I have lived through financial pain, through different points of our lives, and hopefully at this point, really understand what it takes to have a meaningful impact. That really was the was the trigger for us to even start these conversations. Besides that, obviously, when you start to look at the total impact the company can have, also not just from a social impact perspective, but also the financial impact, and how you integrate the synergies, because there’s a massive demographic overlap between our two customer bases, but not an actual overlap between the customers. So you have this massive signal saying, Hey, you can truly expand to that user base that I started talking about at the beginning of the conversation and have a better financial outcome. So that really I mean that pitch that he came. To New York to give us really, really took us by surprise and was was very impactful on why we chose them. And it’s not always the look. A lot of financial people will say, look, always take the largest the company with the largest willing to sign the largest check. That’s not necessarily what we did. In this case, we took the one that we thought was right from a user impactful, but also had the values very much in line with us.

Importance of Social Values in Partnership Decisions

It is, but it’s always complicated. Yeah, I think when you talk about the unfortunately, this customer segment, there’s, there’s a lot more you need to go. Have a have a more of a microscope to really understand what people are actually doing. Is the product flexible? Is there transparency, whether it’s in terms of managing teams, but more, I would say, as importantly, if not more importantly, to what you’re offering, the cost end customer. You know.

Understanding Upbound’s Customer Base

Look, the reality is, despite us being the wealthiest country in the world, and I’m talking about both our overlapping customers, unfortunately, three fourths of our population live paycheck to paycheck. I mean, as an immigrant coming here for the American dream, I would say over 20 years ago, and I’m starting to date myself. It really is mind boggling how we are just continuing to have people living the state of financial stress, right? Given the fact that such a large segment of a population earn $50,000 or below, that’s the most, most amount of money. And what I would also say is that it’s very, very expensive in this country to not be rich, it’s not so much as expensive to be poor. So it’s like

The Challenges of Middle Class Life

That’s exactly right. I mean, the unfortunate point is most of the middle class is also living paycheck to paycheck, as is most of our country, as you would expect. So that is the end customer that we’re trying to solve for. And the way we look at this is saying, hey, what do we do to help reduce people’s financial stress? Whether, as I pointed out, from our perspective, is giving people money between paychecks, even automatically, not using FICO or credit scores, because I think that’s archaic. It’s probably great for a million dollar house in Manhattan. Not so good when you’re living in such a state of financial stress, get money, be able to build your credit score, because, unfortunately, again, the average credit score in America is not that strong and and it’s still important and a bunch of savings, that is the core product that we’re providing. And it’s again, to the same customer base who, at the end of the day, just needs to feel more financially secure and give them a path, including through financial literacy, to get there.

Customer Overlap Between Brigit and Upbound

I’ve talked about this publicly, so I’m happy to state that is about a 10% customer overlap, and that’s and for us, because we’re still a relatively new company, right? We will have, as you pointed out, exactly we’ve got a million plus paying subscribers because we have subscription app, but there’s so much when you’re talking about three fourths of our population living paycheck to paycheck, the and also just being a purely digital, native company, as you pointed out, upbound has a bunch of assets, including a Sema, which is a digital, least owned platform, but also the more older renter Center, which is digital and obviously physical. So just given that the about 10% overlap is a very strong signal for us, I know it might not sound that’s right, that there’s a massive opportunity to cross sell, but at the same time, the fact that 90% of the 90% of the customers hadn’t been cross sold yet gave us both the strong signal as well as a good market opportunity as well.

Benefits of the Combined Entity

Well, I mean, that’s like, I think it’s a lot of question about being able to, quote, unquote, buying time. I mean, I would always argue time is more important than money, most valuable asset. Yeah, yeah. I mean, it’s, it’s, it’s easy, said than done, but that’s, that’s the honest, honest truth, right? So to answer your question, that there’s, there’s a number of things, again, part of this comes back to how fast, as I talked about earlier, as we started this podcast, how fast Brigit can have a larger impact to a larger segment of this population. And that is, we’re literally starting to do some tests this month. It’s only been a month since a closed month, five weeks since close, and we’re going to start to see some of those results coming in this week, next week, so on and so forth. So that is one aspect. The other aspect I would talk about from an outbound perspective, is look, as I pointed out, they still have an underwriting platform as well, but we only for underwriting use cash flow, so that someone’s income, volatility of income, historical spending and borrowing pattern, all of it changes in real time. Yeah, so being able to put our court underwriting platform into a SEMA and renter center, we over a period of time, this will take a little bit more time, we expect their approval rates to go up as they would, and also, hopefully over a period of time, their loss rates go down, as well as part of our court cash flow stack, not only did we do the risk for a management underwriting, we also have a payments engine that predicts when’s the best time of being able to manage payments in a cost effective manner. So all of those things hopefully over a period of time, not hopefully we fundamentally, truly believe, over a period of time, will start to make a multiplier impact on both our companies.

Technology Integration Strategy

Yeah, so the, as you said, one of the one of the perks of having this deal done and and a management team, whether it’s the CFO and CEO, understanding the importance of letting our because we’re only 100 people team, as I pointed out.

Impressive Revenue Per Employee Metrics

We try very hard. We, you know, this is pre, quote, unquote, the AI, boom, it would be the machine learning data company. So being able to get visa type revenue per FTE hopefully gives a sense that the core tech team and our whole team has built core technology that’s differentiated a point that you brought up, and just to come back to the question. So the good news for us, for the short term is we get to operate, as you pointed out, as an independent business entity with limited integration from a core technology perspective, because again, we are serving the same massive customer base, but they are differentiated products that together add value even more so as you look at a look at an individual’s financial journey. So in the short term, we kind of get the best of both worlds as Brigit as an independent unit goes in and says, Hey, please send us your users, and we’ll send you some of our users and start to get that as a whole. So there’s not much deep integration from a tech perspective that’s required, because those things slow people down quite a bit. But the good news is, over a period of time, as I pointed out, we will start to spend more time integrating our payments engine within a SEMA and rent a center, integrating our underwriting. So hopefully that increases again, approval rates when the beautiful anytime you do approval rates, you’re having more financial inclusion. That is literally the reason why I pointed out we got into this business in the first place, being able to give a moment of happiness to an individual says, Oh, I can get access to this product, and I’m paying less than I would from, you know, an expensive loan, or whatever it is, that kind of drives us. So we do expect over let’s call it 12 months, 24 months, and hopefully in the cross sell point a lot sooner than that, to start to have a pretty big impact.

Cultural Integration Challenges

This is a perfectly look. I mean, culture is fundamentally important, as you know, most, most m&a deal succeed or not succeed due to that exactly. The reality is, at least for the near term, near term being two years, we’ve got so much independence, included documented as part of the M and A agreement. So that’s another reason, one of the reasons why we want to do this, we have that have the ability to leverage the mothership, as you called it, but also be independent. But look, the reality is we are good corporate citizens. I mean, we are part of the upbound growth. I’m a shareholder. Our team members are our shareholders. So we’ve already started to integrate a little bit more than I think we needed to, from a formal perspective, because we want to, and that will lead, whether we like it or not, to somewhat of a cultural shift for a larger company. Again, approvals will take a little bit longer we were following additional policies, etc, but that comes as part of the part of the game. How does it impact our ability to innovate? The honest truth is, I don’t know, but I do not expect it to change too much, because, again, we have very much support from the management of the mothership to do it our way, which in essence, is leveraging our own methodology, but also impact using our culture to impact their the larger, larger entities culture as well. But look, it’s the honest truth is, we’ll wait and see, but so far so good.

No, I appreciate that. Look, I’ve made it very clear before we did the deal that entrepreneurs are not necessarily the the the slowest employees, etc, we want to push.

Entrepreneurial Leadership Style

I hopefully break things, yeah, yeah, no. I mean, look, look, the thing is, what I was saying is, look, we hopefully, and I don’t know how to answer this as more effectively than this is, I worked in public companies before, two large public companies, 50 100 billion dollar public companies at that point in time, including as an investment banker. So I understand the importance of being thoughtful, being publicly aware, and what can or cannot move the stock price, but at the same time, you know, the reason why we chose upbound as as our partner and acquirer was we did believe that we can continue to have the pace to move as fast as we we can maybe a little bit slower, and that’s fine, because you lose some speed potentially, but you gain this access to this large infrastructure, Not to mention users. Look, if I can, we might, like I said, might lose, might lose some speed to product, but what we’re gaining is more people in finance to do to help you know, widen that more people in compliance to be even more thorough, maybe even faster, but more thorough is, I would argue, is even more important. So we get the infrastructure, we get more users. Does that come at a cost of reducing product speed, including how I feel about it potentially? But like I said, it’s too early to tell, just to be completely honest, but we are very bullish that overall, when you look at the picture, and even I’m bullish, I expect this to do work very effectively. And look, we are shareholders, as I said, and one of the larger shareholders now in the company as an employee, and we are very, very bullish in trying to make this work.

12-Month Post-Acquisition Game Plan

This is going to sound boring, Zack, but better. It’s same, but faster. Even though we have a product we have, we have this, this product that we are, we’re going to be taking out the market. I can’t talk too much about it, but let’s just say it’s, it’s, it’s a socially it’s, it’s BNPL, but so much, so much better for this customer base, from a social impact perspective, from a cost perspective and access to credit perspective. That’s the, the only thing I can actually say about that. And instead of us trying to get to say zero customers to a million customers in a period of making this up 24 months, I don’t have the numbers, this will help us get there half the half the time. So that is, that is something I’m fundamentally excited about from my own like, look, one of the other things is we’ve got a very strong leadership team here at Brigit is as as one of the business units of upbound. It gives, it gives them an opportunity to take on even more responsibility. And I’m, I’m super excited to give away a little bit more of my responsibility to this amazing leadership team that have been waiting in the wings, and I’m not going anywhere. It’s like, I do this much, maybe I’ll do a little bit less, and hopefully maybe a little bit less over a period of time. And they’re excited about that as well. And that is, you know, part of my my promise as a leader, to be able to give them more responsibility. But I’ll be very clear, I’m I’m not going anywhere.

Impact on the Financial Health Industry

I mean, if there’s, there’s, again, there’s a two big, big questions. I mean, what I would say is, if company, if exits, help entrepreneurs think that there’s an opportunity to build a socially impactful company and actually have a worthwhile financial exit in building enduring companies. I didn’t even think of that. I’m very proud of that. If one entity will come up because they heard about Brigit and the impact that we’ve had that will make me, honestly, super excited. So I hope that’s the case. Zack, I think it’s it’s definitely not, not the case, but we don’t know to what extent that’ll be impacted. So hopefully that that that’s positive.

Future of Financial Health Products

I mean, I don’t, I don’t know if a do. Deal that we’ve just had, or other companies having in terms of exits leads to that’s going to be the catalyst of new products. But I think just as people understand the market, as other companies go public, or other exits or might be happening in the relatively short term, that hopefully gives you continue to evolve, if anything, what’s happened is, at least, where funding is coming from, what from the VCs? They understand that you don’t always have to solve for a problem. They are, they are. They need a solution to I mean, one of the things when we started up seven years ago, whatever was, I was like, Hey, I don’t really need this product. Yeah, you don’t. But that’s hopefully you great. Unfortunately, most of America does right when they play around. This is this looks pretty nifty. Again, I don’t need that feature. I don’t need that feature. Take it out of you. I think the good news is companies like us and other companies that are in market, maybe for larger IPOs that starts that question starts to go away, and saying, Hey, you can build a profitable, worthwhile exit company for the people who need it the most. And that does not have to be a fancy, no offense rich VC in New York or Silicon Valley.

Proving Viability of Social Impact Fintech Exits

As I think about it. I mean, yeah, it hasn’t to the extent that true FinTech companies who are trying to make a social impact have actually exited. I I didn’t think about that. Zach, that’s that that is social FinTech impact companies for this segment the population, historically, haven’t had exit.

Historical Trends in Fintech Exits

No, I think you asked the question. And like I said, it took me a second to think about using my my experience in fintech, including as a former banker, you’re right, historically, obviously, B to B exits have been pretty strong in the FinTech space. Lots of products built for top 5% top 10% very few products historically, historically. Now it’s obviously changed, built for the median American and below from a social impact social standpoint, obviously.

Active Deal-Making

In this company, we looked at acquiring several, several assets in the past, and we came close nothing that actually we ended up pulling the trigger on, but again, as part of a larger entity that with public currency and and a willingness to continue to invest in this space, that’s why we are here. We are even today, actively looking at deals. In fact, I have a deal that I was looking at this weekend.