Jesse Chor grew up with his grandfather and uncles in Montreal’s Chinatown to join their collective sign. It is an informal peer-to-peer savings and lending network within a community of family, neighbors and friends.
The concept, mostly rooted in Mexican culture, has been around for centuries. Chor asked his grandfather why he used a sign, and his answer was that as an immigrant, he lacked access to traditional banking services, loans and credit. The sign has supported his grandfather and others with everything from unexpected expenses to starting their own businesses, Chor told TechCrunch.
The memories stayed with him as he went into the world of work, and while at Yahoo (full disclosure: The parent company of TechCrunch), he was tasked with building a version of a sign in 2018. However, what’s unique about Chor is that he was able to use something like that before when he was still working at minimum wage jobs.
“Not only that, I feel like everyone else I’ve worked in places can do the same,” Chor said. “It’s really the idea of helping the community sustain each other, empower each other and uplift each other while making money more accessible.”
Adapting the approach to small businesses
Yahoo’s trademark product failed after about six months, according to Chor, and he left Yahoo in 2019 to start his own company. Two companies later, he continues to think about the idea. When he learned the widely known statistic that most Americans would struggle to handle an unexpected $400 expense, he knew what his third company needed.
He started sign, the platform he built that provides financial stability and community relationships through collective savings. Tanda uses the Rotating Savings and Credit Association model and goes one step further to offer the service to small businesses as a way to retain employees, reduce turnover and reduce burnout.
“We partner with small business owners and they offer this as a benefit to employees,” Chor said. “There is now a micro culture, if you will, so that we can better connect with each other.”
How it works
In a traditional sign, one person would lead the collection of money and maintain the ledger system for lending money. Chor’s approach is to use technology to replace that work.
Business customers advertise on Tanda to employees, who scan the QR code and get access to the product for free. Instead of variable dollar amounts, these are fixed increments, and users can start with $100 and borrow up to $2,500.
Tanda then pays a fee based on the payment position within the circle of people. For example, those who take the first or second payout will be assessed a fee of about 10% or 8%. Those in the middle are free or receive a reward, said Chor. He also takes interest from employers who want to sponsor the product to cover the costs.
“One of the secrets about mortgages is, historically, they’ve had very low default rates, something like under 2%,” Chor said. “The reason for this is community and adult friendship and social responsibility.”
Tanda is still in its early stages, working with a small group of restaurants and managing a few hundred thousand dollars, while it builds its waitlist.
Meanwhile, the company closed $4.5 million in seed capital from Initialized Capital and Arc, Sequoia Capital’s pre-seed and seed-stage catalyst. Chor intends to deploy the funds to expand the business and hire additional employees.
“We want to help employers offer something more than money, but how to build a community and trust within the team so they can work better,” said Chor. “For us, that’s really the next step — unlocking that ability within our product.”