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Hi, fintech fam! 💜

I am thrilled to share that the official agenda and speaker lineup for our upcoming Fintech Is Femme Founders Summit are now live on the Fintech Is Femme website.

Kicking off NY Tech Week, the Fintech Is Femme Founders Summit is crafted to provide you with the content and community that are key channels for your startup's growth.

During this summit, you'll receive a full masterclass in:

• Fundraising Strategies from top investors and founders.

• Go-To-Market, including identifying target markets and optimizing distribution for a successful launch.

• Corporate Collabs with a tactical presentation on a common hurdle: GTM bank integration.

Save your spot here.

INTERNATIONAL INVITATION

Heading to Money 20/20 Europe?

Fintech Is Femme is partnering with the City of Milan to host a fabulous dinner on June 5 with fintech leaders worldwide to discuss the pressing issues that must be addressed to improve inclusion and reduce the gender gap in our industry.

Interested? Respond to this email and RSVP with me to secure your spot.

In the heart of Amsterdam, you'll have the chance to attend a unique collaborative roundtable of fintechs, banks, financial experts, investors, technologists, futurists, and innovators to discuss the future of fintech in Europe, which lies in its ability to recognize and nurture talent.

INNOVATOR

Rethinking Retirement Savings for SMBs

Small businesses are vital to the U.S. economy, with 33.3 million small enterprises employing about 61.6 million people, per 2023 Small Business Administration data.

They also contribute 44% of the nation's economic activity.

Immigrants own many of these businesses and are 80% more likely to start businesses than native-born Americans, according to a 2022 American Economic Association study.

Immigrants often turn to entrepreneurship due to the challenges of obtaining work visas. The New American Economy reports that 3.2 million immigrant-owned businesses employ nearly 8 million workers and generate $1.3 trillion in sales, highlighting their crucial role in job creation and economic growth.

Growing up in Los Angeles as the child of Korean immigrants, Jean Smart was immersed in small businesses and entrepreneurship.

Her parents ran various ventures, from restaurants to dry cleaning services, pursuing the American Dream.

They faced numerous challenges, including language barriers, long work hours, and multiple responsibilities.

Despite their hard work, they lacked financial education and retirement planning, leaving them without savings for later years.

"For my parents, their retirement plan was centered around their children—a cultural norm, perhaps," Smart said. "They had no knowledge of 401k plans, retirement savings, or the stock market."

Concepts like those in the Wall Street Journal were foreign to her family.

"While my parents worked hard daily, they hoped we kids would pursue higher education and stable corporate careers—to become doctors, lawyers, or professionals."

Following her parents' wishes, Smart attended the University of California, Berkeley, and worked at financial institutions like Charles Schwab, Citi, and UBS.

“It wasn't until my first job after college that I learned about retirement savings plans,” she admitted.

By her early 40s, Smart wanted more from her career. Although she enjoyed the steady paycheck and the ability to support her parents and family, she felt restless and wanted more meaningful work.

Then COVID happened, followed by George Floyd’s murder and increased violence against Asian Americans, with hate crimes against Asians spiking 164% in early 2021.

The struggles faced by small businesses during the pandemic, especially those owned by marginalized communities, highlighted the need for change.

Scared and angry, Smart decided she was tired of being beholden to others and wanted to make a difference.

As an Asian woman who has often been the only one in the room, she had a clear vision for her company.

She aimed to ensure that more people like her parents had better access to retirement savings plans, helping employees build wealth gradually through regular contributions and investments.

With diligent savings and the pandemic providing time for reflection, Smart decided to transition from corporate America to entrepreneurship.

She saw issues in the market, where many businesses still relied on outdated systems and faced hidden fees that hurt both employers and employees.

These fees, often a percentage of assets under management, can significantly reduce paychecks over time. Despite 401(k) plans offering financial wellness and tax benefits, most legacy providers don't target small businesses because they're less profitable (I.e., they choose not to innovate and capture additional market share).

Smart saw this as a missed opportunity since most SMBs have fewer than 20 employees. She wanted to use advanced technology to make retirement planning accessible for these micro businesses.

As the pandemic dragged on, businesses struggled to survive, prompting government intervention for aid.

Smart had a breakthrough idea during this time: a fintech platform tailored for small companies, especially microenterprises.

She saw the need to focus on businesses with up to 20 employees, many owned by women, minorities, and immigrants.

Leveraging fintech, Smart envisioned a self-serve business model to make retirement benefits affordable for small businesses. This approach quickly gained traction for her startup.

Smart created a retirement savings platform for small businesses and entrepreneurs that automates employee investing, reduces costs and paperwork, and provides educational tools for employees.

Traditionally, 401(k) plans have been seen as perks for large corporations, but Smart’s platform aims to simplify and democratize retirement planning.

"By removing unnecessary complexities and using a user-friendly approach, we want to create a solution that resonates with everyone, no matter their financial background," she said.

The platform is designed for Americans earning less than $100,000 annually, helping them build wealth over 30 to 40 years.

"Even saving just one basis point over this timeframe can lead to substantial wealth accumulation," she noted, emphasizing the goal of passing on generational wealth.

Smart launched the platform, named Penelope after her daughter, in January 2022.

"I want her to build on the generational wealth I'm handing down to her," she explained. "I don't want her to be my retirement plan."

How It Works

Penelope uses a low-cost subscription model to offer practical savings tools and options like Pooled Employer Plans (PEP), traditional 401(k)s, and Solo 401(k)s. It’s a cloud-based 401(k) platform that avoids lengthy, jargon-filled documents, providing concise content in plain English.

One of the biggest misconceptions is that 401(k) plans are too expensive for small businesses.

While cost can be an issue, Penelope uses government incentives and a streamlined approach to make it affordable. Smart highlights the Secure 1 and Secure 2.0 legislation, which offers tax credits of up to $16,500 for businesses starting retirement plans.

Unlike many providers that use assets under management pricing, Penelope charges flat fees, covering general expenses and eliminating costly asset-based pricing. This approach saves employees significant amounts over their careers.

Another myth is that investment choices are too complex. With over 6,000 funds available, choosing the right ones can be overwhelming.

Penelope simplifies this by offering target date funds based on employees' birth dates, managed by a top-tier asset manager for a balanced and secure investment strategy.

Smart designed Penelope to make the process easy. Instead of overwhelming small business owners with endless questions, they answer just a few essential ones to get started. “Instead of asking 130 questions, we just focus on eligibility,” she said.

Many of Penelope's plans include a "safe harbor" matching component, saving small business owners time on administration, audits, and compliance testing. The platform also offers multilingual support and eliminates financial jargon, ensuring every employee can build a retirement fund.

Smart is passionate about emphasizing retirement planning for women and women of color, who often earn less, live longer, and take on primary caregiving roles. Starting early is crucial for financial security, and Penelope aims to make financial planning less intimidating.

Although employer-sponsored retirement plans are largely voluntary, many states are passing laws requiring businesses to offer these benefits. Over the past decade, 47 states have taken steps toward adopting mandatory retirement programs.

“I’m optimistic that state mandates will support small, family-run businesses like my parents', as well as startups,” Smart said. “The best time to start saving was 20 years ago. The second-best time is today, and the third is tomorrow. There’s no other way.”

Penelope raised $2.1 million in pre-seed funding led by Slauson & Co., with additional investors including Amplify LA, Black Jays, and executives from Wells Fargo, Citigroup, and U.S. Bank.

Fundraising Strategy

Despite the challenges faced by female founders in securing venture capital, Smart approached it methodically.

“I took it as a math problem—if I need 100 meetings, that’s five meetings daily. I did the LinkedIn search and figured out who knows them and who the decision-maker is," she said. "I treated it like flipping burgers—just keep flipping them."

As an Asian woman and the child of immigrants, I believe Smart’s representation is vital in breaking barriers in corporate America and fintech.

Asian women often face the “bamboo ceiling,” a term for the barriers that prevent career advancement.

According to a 2022 study, more than 80% of Asian American and Pacific Islander (AAPI) women believe the bamboo ceiling is real, and 65% disagree that advancement opportunities are equitable.

Smart leverages community and network power to overcome these barriers by attending networking events and community gatherings. "You have to get off your computer and meet people in person," she said.

In the next three years, Smart aims to help hundreds of thousands of small businesses and empower a million individuals to enter the capital markets. "Over two decades, I’ve seen the transformative power of investing, even in small amounts," she said. "Wealth accumulation isn’t just luck or hitting it big in entrepreneurship or cryptocurrency. It’s a gradual process over generations."

Future of Penelope

In 2024, Smart announced Penelope's expansion into the third-party administrator space with white-label retirement plans and recordkeeping, aiming to disrupt the outdated industry.

Legacy recordkeeping platforms are clunky and expensive, and Penelope seeks to reinvent this with a focus on ease and accessibility through fintech.

At its core, Smart's vision is about reducing financial, psychological, and emotional suffering. Money can evoke strong emotions, and navigating business and finance complexities can be daunting.

By implementing sound financial practices, individuals can alleviate these burdens and progress toward their goals, empowering them to take control of their financial futures, one step at a time.

Love stories and blueprints like this? You’ll love my upcoming book, Fintech Feminists, filled with over thirty stories and strategies from leading women in fintech. Pre-order your copy here.

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_{I WANT IT, I GOT IT}

• 📚 Today’s Read: This explainer from UN Women about Artificial Intelligence and gender equality. I plan on using this insight to cover in a future newsletter!

• 👀 Today’s Watch: Now that I’m watching Netflix again after a hiatus during book writing, I finally finished the first season of Avatar, the Last Airbender and wow is it epic! 10/10 recommend. Also, be ready to cry, a lot.

• 🍣 Today’s Eats: My mind is already in Europe—I cannot wait to eat the fresh bread and wine in Amsterdam (one of my favorite cities!) Did I mention I’m hosting a dinner during Money 20/20 Europe next week? Reply to this email to find out where dinner is and to RSVP!

_FINTUNES

🎵 Japanese Breakfast: NPR Music Tiny Desk Concert

Add these incredible AAPI musicians to your playlists and enjoy their music all year round!

That’s all for now! Stay safe, everyone. Hug your loved ones. See you Thursday!

Love,

Nicole

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