Calgary-based FinTech startup Woveo has raised $2.3 million CAD in seed financing as it looks to expand the reach of its community wallet platform.
The latest funding round was led by BKR Capital, and saw participation from Relay Ventures and Northpine Foundation, among others. Combined with its $1.5-million pre-seed financing round closed in 2022, Woveo has raised $3.8 million to date.
Founded in 2020, Woveo has developed a digital community wallet designed to help groups of people improve their financial well-being through group rotating savings, credit building and short-term credit access.
“Utilizing a rotating group savings model, Woveo has achieved an impressive 100 percent repayment rate.”– Jonah Chininga,
A group rotating savings model refers to when a group of individuals agree to contribute a fixed amount of money to a common fund on a regular basis. The total amount collected in each period is then given to one member of the group. This process rotates among all the group members until everyone has received their share.
Unlike traditional loans, there is usually no interest involved; members receive only what they have contributed over time.
Group rotating savings are often used by individuals who may not have easy access to formal banking services, otherwise known as “non-prime” customers. A 2021 study conducted by the Canadian Lenders Association indicated that over 8 million Canadians in the non-prime category struggle to secure affordable credit, which has excluded many from the credit market. Woveo is targeting this group of underserved banking customers.
This has been compounded by a series of interest rate hikes from the Bank of Canada, and the federal government lowering the maximum allowable interest rates from 47 percent to 35 percent in March. Woveo said the latter change has opened up “substantial opportunities for alternative credit solutions.”
Woveo claims it has worked with 23 communities and served 18,000 members to date. The startup will put the new funding towards customer acquisition in addition to enhancing its product offering as it looks to continue innovating in the community banking space.
“Utilizing a rotating group savings model, Woveo has achieved an impressive 100 percent repayment rate, demonstrating the effectiveness of our approach,” Woveo co-founder and CEO Jonah Chininga said in a statement.