Thought Leaders in Financial Technology: Grain CoFounder and COO Carl Memnon (Part 3)

Sramana Mitra: After you graduated from Arizona, were you successful in raising funding?

Carl Memnon: Absolutely. We spent a lot of time on the product itself and taking the learnings from that program and implementing it into the product. I wouldn’t necessarily say that the sandbox itself was the thing that allowed us to raise money in the same way that YC will help facilitate raising money. What it did do is it allowed us to get the company in a position where we could raise money.

Sramana Mitra: Did you raise money?

Carl Memnon: We did. It was necessary for what we wanted to do in terms of the next stage of the company building out the infrastructure. We didn’t raise a large amount between graduating the sandbox and entering into YC. We raised enough to get to that next level.

Sramana Mitra: What was the amount?

Carl Memnon: It was a couple hundred thousand dollars.

Sramana Mitra: That’s from micro-VCs or angels?

Carl Memnon: Mostly angels.

Sramana Mitra: In Arizona?

Carl Memnon: Across the board, but mostly in the Bay Area.

Sramana Mitra: How did you find these angels?

Carl Memnon: Christian has been working in tech and FinTech in the Bay Area his entire career. As a result, he had a network there. I’m on the other side. I live in New York. That whole ecosystem is foreign to me.

Sramana Mitra: Before you applied for Y Combinator, you had a couple of hundred thousand dollars in funding. You had an MVP and you had some amount of customer validation. There were people who were using your product. Were they already borrowing money through your product?

Carl Memnon: In Arizona and Utah, in a very limited capacity. The regulatory relief allowed us to lend money. It wasn’t publicly available.

Sramana Mitra: Why Arizona and Utah?

Carl Memnon: Arizona because of the sandbox. Based on the learnings we got, we were able to get a license in Utah. We got a small program in Utah just to broaden the scope of the beta testing before we were able to get it on the app store.

Sramana Mitra: You need state approvals?

Carl Memnon: Yes, there is a licensing process for every state. Every state has its own regulatory scheme when it comes to lending. On top of that, there’s the federal regulatory level. At different stages, you need a lot more resources to navigate that.

Sramana Mitra: You went to Y Combinator at the beginning of 2020?

Carl Memnon: Right. Between 2018 and the end of 2019, when we applied to YC, we did a couple of things. We further developed a product and got it to a point where we could bring it to partners in order to deploy the Grain app. We entered into an arrangement with Ponce Bank for a very small amount. It was $5 million. We applied to YC and got into YC. Within the first month of being in YC, we launched Grain with our first partner on the app store.

This segment is part 3 in the series : Thought Leaders in Financial Technology: Grain CoFounder and COO Carl Memnon
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