Thought Leaders in Financial Technology: Grain CoFounder and COO Carl Memnon (Part 6)

Sramana Mitra: What is the business model?

Carl Memnon: The business model is simply on the backend. We split net interest income with our bank partner. They pay us a service fee which is a function of the net interest income that they get.

Sramana Mitra: How many bank partners do you have now?

Carl Memnon: We have two bank partners. We’re working with a number of other banks that we hope to onboard in the short term.

Sramana Mitra: How big is your team?

Carl Memnon: We have about 40 employees. We are a fairly lean team given the customer size that we have. In this market, in particular, we want to remain agile. Because we are a technology company that has built a very efficient product in terms of servicing these accounts, we’re able to do so with a smaller headcount.

Sramana Mitra: Where are these people?

Carl Memnon: Our headquarters is in California, but our team is across the United States. We’re an early 2020 YC batch. As we started to hit that growth and hire people, we were in the midst of that pandemic. We were really a remote-first team even though we had to have a base of operation just because of the industry that we’re in.

Sramana Mitra: It’s been a very interesting shift in the pandemic era. Most companies have adopted this remote-first model. That’s broadly applicable. It has broadened hugely. It’s a wonderful trend. We’ve always been virtual. I started One Million by One Million in 2010 as a remote-first company.

Carl Memnon: To your point, our company is a very diverse company. We have people from all types of backgrounds. All from different parts of the country that brings a different perspective. Credit is something that permeates across the country. It doesn’t matter who you are. You have to interact with credit. It has been helpful in creating a product with broad appeal.

Sramana Mitra: After Y Combinator, have you raised more funding?

Carl Memnon: Yes, we raised the majority of our funding post YC. We raised the seed round right out after YC. That has allowed us to scale the business.

Sramana Mitra: Seed is all you’ve raised post-YC?

Carl Memnon: Yes.

Sramana Mitra: How much?

Carl Memnon: $15 million.

Sramana Mitra: At seed? That’s a Series A.

Carl Memnon: At the outset, we focused on unit economics and revenue. We have been able to raise in a different way. Ten years ago when you talked about raising capital, you can talk about revenue and profit. Your margins don’t matter.

We approach the building of the company in a different way. We raise when we need to. We’re never really out to raise a big Series A. We raised the seed and then the seed extension. We didn’t want to raise a Series A prematurely. The way we see Series A is a function of when we get to a particular point. We’ve navigated it a bit differently.

Sramana Mitra: I’ll comment first that there are a lot of companies who have built-in fundamentals-oriented ways. You’re not the first to build a fundamentals-focused company. We, very much, underscore the value of fundamentals-focused company-building.

In One Million by One Million, entrepreneurship equals customers, revenues, and profits. Financing is optional. Exit is optional. We celebrate and support the fundamentals-focused company-building philosophy. Given that though, $15 million is a fair amount of financing.

This segment is part 6 in the series : Thought Leaders in Financial Technology: Grain CoFounder and COO Carl Memnon
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