Key Insights:
- 401(K) cash advance company Lendtable has closed an $18 million Series A funding round led by O1 Advisors.
- Clients include Google, Microsoft, Walmart and Boeing.
- Lendtable has disbursed over $2.4 million in match benefits to hundreds of employees since last year
Lendtable, a 401(k) cash advance fintech, has closed an $18 million Series A funding led by O1 Advisors. Since launching in 2020, founders Sheridan Clayborne and Mitchell Jones have made it their goal to help U.S. workers tap into the $300 billion in benefits that go underutilized each year.
“This is the first company to help people take advantage of their unused 401(k) match and ESPP [Employee Stock Purchase Plans], but there are many businesses that have paved the way for it to exist,” Jones and Clayborne told The Plug, acknowledging other cash advance and investment fintechs in the space like Acorns and Betterment, which have simplified access to investment and retirement accounts.
How The Math Works
Lendtable makes its money after employer matching kicks in to a 401(k) plan. For instance, if an employee receives a match for $5,000 from their company, Lendtable will take 10% of that match, leaving the employee with $4,500 without requiring employees to contribute any of their own initial capital.
“If you’re in a 20% income tax bracket, you contribute $5,000 pre-tax to your 401(k), which means you’ll miss $4,000 post-tax from your paycheck. Lendtable will give you the $4,000 to help you get your employer’s $5,000 match. Once that money is vested, the employee owes Lendtable back $4,400 (the principal provided plus the 10%) and they can pay that back by withdrawing from their 401(k) or through a simple wire transfer/debit charge,” explained Jones and Clayborne via an email.
Tackling Class and Race Issues When It Comes to Retirement Planning
Clayborne, 22, and Jones, 27, are both wunderkids in their own right. The Forbes 30 Under 30 alumni met while working as product managers at Dropbox, counting successful ventures among their list of achievements. Jones is a Yale graduate and Y Combinator alumnus who previously ran a personal finance management startup, while Clayborne funded a multi-million dollar sneaker hedge fund.
The former Dropbox colleagues noticed a trend amongst their colleagues and friends who weren’t maxing out their employer 401(k) matches due to a variety of reasons like student debt, moving expenses, or having to send money back to their parents and families. They realized the desire to contribute to available plans was there, but the liquidity was not.
“Women, minorities, international employees, are all significantly less likely to take advantage of their employer’s benefits. So we help to bridge that gap,” Jones said.
A common thread that led to them founding Lendtable was growing up seeing people that were close to them being unable to save or financially plan for their futures.
“As a Black-founder, I saw this problem in my own family and community,” Jones said. “Very few people were actually saving for retirement, not because of a lack of interest but a fundamental inability to part with their money.”
This mission also resonated with participating and returning investors like SoftBank’s SB Opportunity Fund, Valor Equity Partners, Socii Capital, Streamlined Ventures and CEOs of Complex Networks and Social Finance. To date, the company has raised $26 million in venture funding.
“Lendtable is a product many of us wish we had at some point in our careers – accelerating wealth creation by making it affordable to take full advantage of a 401(k) employer match and ESPP without losing a chunk of your paycheck,” SB Opportunity Fund Managing Partner Shu Nyatta said in a statement.
“We believe in their mission, but most importantly, we believe that Mitchell [Jones] and Sheridan [Clayborne] are a dynamic team with the skills to build a very valuable business.”
Roadmap and Use of Funds
The two-fold benefits for companies and individuals have helped Lendtable expand its team of 15 employees to 30 by the end of the first quarter next year. Since launching last year the company has onboarded more than 100 employers like Walmart, Facebook, Google, Microsoft and Boeing. Lendtable has disbursed over $2.4 million in match benefits to hundreds of employees since last year, according to the company.
The funding will be used to grow Lendtable’s platform and team. The company feels it has staying power even in the current employee’s market.
“In this ultra-competitive hiring market, benefits are the key differentiator,” Clayborne said. “As an employer, being able to guarantee that your employees can get access to retirement savings that they otherwise never would’ve been able to access is a very big deal and selling point.”
