GoingVC Partners: Why We Invested in The Beans

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Executive Summary 

We are delighted to share our latest investment in The Beans. GoingVC Partners is thrilled to partner with Melissa, Jeff, and the entire The Beans team to support them in building a personal financial wellness platform in FinTech, an industry growing to $1.5T globally by 2030. 

The Beans is a B2B SaaS company that automates the finances of America’s Caring Professionals, defined as employees working across the education, healthcare and public sectors. The Beans’ unique technology and proprietary data models help users create a personalized financial plan so that Caring Professionals can enjoy their hard-earned money. 

According to an Employee Financial Wellness Survey conducted by the American Psychological Association in 2022, money was the number one and longest running cause of stress for employees. Caring Professionals, who have chosen careers of mission over money, often feel stressed about their finances. They report 30% higher financial stress than similarly compensated peers. As a result, financial stress is the number 1 reason Caring Professionals leave their jobs.

The Beans helps Caring Professionals (or Carers) automate their financial workflows so that employees do not have to think about planning their finances. The Beans’ app analyzes a user’s earning and spending trends to determine the right steps to take and offers to do it for the user automatically. By providing recommendations and automation for financial tasks, it improves the relationship between users and their finances.

We Love It: The Beans

The Product: 

Platform that automates the optimization of Carers’ finances, enhancing employee retention and personal savings

The Team: 

Seasoned entrepreneurs with deep expertise in evidence-based interventions for personal finances and empathy for Caring Professionals as former teachers turned technologists. 

Melissa Pancoast (Co-Founder and CEO)

• Deep domain experience to this problem as a former researcher with the University of Oxford’s Centre for Evidence-Based Interventions, developing the Economic Strengthening Program for reducing financial stress that has been rolled out to more than 300 million families across the world. 
• Co-Founder of AI venture fund, giving her access to great investors and an understanding of incorporating the technology into the product.
• National level rower

Jeff Browning (Co-Founder and CTO)

• Employee #1 at Tetra, and early at Bloomboard, StudyRoom and MightySpring (all YC backed EdTechs)

The founders' experience as former Math teachers also gives them a significant advantage in navigating the complex market and a network within caring class employers.

Alex Orozco (Co-Founder and Chief Design Officer)

Formerly of J. Walter Thompson, Tomboy Tailors, and Teach For America. Built the first suit companies for people who aren't men, was head of media for a 3-Star Michelin restaurant, taught 6th grade ESL math in NY.

Top-tier investors: 

Current investors include Commerce Ventures, Precursor Ventures, Esther Dyson (Super angel of Square, Facebook, 23AndMe), Manuela Rios (a16z scout), and others. 

Unit Economics: 

The company’s value proposition is backed by strong economics The Beans has contracts in place to reach 300K+ caring professionals. The Beans reports an 84% gross margin and an exceptional LTV:CAC of 7:1. In terms of engagement and retention, The Beans had its 1st renewal at 160% NRR. 30 Customers have been established, including the National Head Start Association.

Pain Points:

Money is often cited as the number one and longest running cause of stress. According to a recent CNBC survey, almost 60% of Americans are living paycheck to paycheck. Some feel the pain more acutely than others, such as America’s Caring Professionals, defined as those who work in education, healthcare and public service. These Caring Professionals, who have chosen careers of mission over money, often feel stressed about their finances. They report 30% higher financial stress than similarly compensated peers. As a result, financial stress is the number 1 reason Caring Professionals leave their jobs. In addition, inflation and recession fears have compounded the turnover for Caring Professionals, causing the workforce in education, healthcare and the public sector to be strained. Caring Employers need to resort to other non-monetary benefits in order to retain talent. 

Benefits of The Beans’s platform to employers include:

• Employee Engagement: 98% staff participation in the platform, with 69% ongoing engagement 
• Employee Retention: 12% reduction in employee churn

Benefits to employees include:

• End User Savings: on average, users have saved $2.8K, paid off $5.7K in debt, and reported significantly less financial stress after 6 months. 
• Finance Data Visualization: Users can look past numbers on a page and see the real proportions of their finances.
• First FinTech to Market: Other players in the employer benefits space are legacy companies taking an old school approach of providing financial advice and products

Employees that utilize The Beans have increased their savings contributions by 9x.

The Market

According to research from the Boston Consulting Group (BCG), the global fintech market is expected to grow sixfold from US$ 245 billion to US$ 1.5 trillion by 2030. Personal finances play a crucial role in individuals' lives, highlighting the importance of managing money effectively. It enables people to achieve financial stability, meet their goals, and secure their future. 

With the rise of personal finance apps, individuals now have convenient tools at their fingertips to track expenses, create budgets, and monitor their financial health. These apps provide real-time insights into spending patterns, facilitate goal setting, and offer personalized recommendations for better financial decisions. Successful companies include Acorns, NerdWallet and Mint. 

Moreover, the increasing emphasis on financial literacy has paved the way for a growing market opportunity. As people become more aware of the need to understand and manage their finances, there is a rising demand for apps that offer educational resources and guidance. Personal finance apps have also witnessed trends such as integration with banking and payment services, AI-powered financial advice, and investment features. These trends indicate a shift towards digital financial management solutions, making personal finance apps a promising market with ample growth opportunities. By empowering individuals with financial knowledge and providing them with intuitive tools, personal finance apps are transforming the way people engage with their money, leading to improved financial well-being and long-term financial success.

Competitive Advantage

By utilizing a unique B2B approach, The Beans has a differentiated distribution via Caring Employers. Most FinTech Go-To-Market motions have been D2C, a route The Beans attempted and have since pivoted from. 

The app’s unique feature is its data visualization option, which allows users to look past numbers on a page and see the real proportions of their finances. Visual financial aids have been proven to help people score better on math problems. The Beans’ Visual Financial Plan provides a more holistic look at one’s finances. The Beans will send customers support to stay on track and they are able to earn achievements as they adhere to the plan. 

The Beans is the only financial planning tool that uses evidence-based design and strategies proven in randomized controlled trials to work. Evidence-based design is the process of constructing an environment based on scientific research to achieve the best outcomes possible, to alter human behavior. They are also the only tool that is offered as a Professional Development program via employers. This has additional benefits in that the company is paid up front for 100% of staff and they are incentivized or required to participate in The Bean’s Professional Development content, which then leads to high activation rates. 

Long term advantages

• Large Underserved Market: Financial stress is the number 1 cause of churn among caring professionals - although these individuals want to pursue these meaningful careers, they are not able to do so because of their finances. This has a knock on effect on the rest of the economy - resulting in worse government, schools, healthcare, and a workforce increasingly unable to find child and senior care. The Beans serves this underserved group of 40M customers, or 3 in 10 US employees, by working with employers to retain carers.
• Data Model Foundation: Using the data that they collect on each user, The Beans has built its own taxonomy and data models after building these by hand for 1000 teachers. These models are patent protected - the models learn through human in the loop training, and get smarter across users as data network effects kick in.
• Regulatory Tailwinds: There is $176B of federal funding available through the CARES Act to support the mental health of education and healthcare professionals, incentivizing employers to onboard programs like The Beans. The company’s SOM - US Employers with qualified development programs, counts over 150K employers. 

Massive Market Opportunity: 

There are approximately 1.5 million Caring Class Employers in America, including non-profit organizations, school districts, hospitals, local governments, state and federal agencies. Assuming an average of US$ 10,000 Annual Contract Value (ACV), this results in a bottom-up TAM of US$ 15 billion. Approximately 10% of the total TAM of 1.5 million Caring Class employers are expected to be qualified customers for The Beans (SOM).   

The company’s go-to-market is further helped by requirements for caring class employers to provide Professional Development (PD)/mental health solutions for financial stress. The Beans is paid upfront for 100% of staff, and staff are obligated to participate in The Beans’ Professional Development content, leading to high activation rates.

Real World Benefits

Customers have seen tangible real world benefits. 

 This is what National Head Start Association, a customer of The Beans, has to say about the product: 

"We are excited to bring The Beans to the teachers and staff of Muskogee County. The reality of our teachers' own finances can weigh so heavily and generate so much stress. That is why this program and partnership with The Beans is important in terms of impact." - Christin Bolinger, Head Start Program Director, Muskogee, OK. 

"I see firsthand the impacts financial stress has on the physical and mental health of our staff. The Beans' research-based approach will be a game-changer by providing the tools to simplify that path to financial success. After attending the National Head Start Association conference in December and being blown away by this program, it will be my legacy to bring The Beans to my Head Start community." - Vincent Aceron, Head Start Parent Advocate.

The company’s value proposition is backed by strong economics - The Beans reported $360K in ARR as of March 2023, growing 34% QoQ or 3x annually. It reports an 84% gross margin and an exceptional LTV:CAC of 7:1. In terms of engagement and retention, The Beans had its 1st renewal at 160% NRR. 

Timing

The Beans is able to capitalize on several structural trends - a growing workforce of caring professionals that are not easily replaced by AI, regulatory requirements for mental health and professional development solutions along with greater financial literacy amongst the general population. The Beans’ unique distribution platform via Caring Employers, as well as their evidence-based product differentiates them from their competitors.  Caring Class employers are legally required to offer courses for mental health, allowing TheBeans to be offered as a Professional Development program to employers. There is $176B of federal funding available through the CARES Act to support the mental health of education and healthcare professionals, incentivizing employers to onboard programs like The Beans. As a result, The Beans has unlocked an unfair advantage in B2B growth in comparison with other apps in this space. 

Road to Unicorn

Reaching $100 million in annual recurring revenue (ARR) and a $1 billion valuation is an ambitious goal for any company, but The Beans has a clear pathway to achieve this level of success. The best proxy for The Beans is looking at other savings and investing apps such as Acorns - back in 2022, Acorns was planning to go public at a $2.2B valuation on $126M in annual revenue, or a multiple of 17x. The Beans is expected to be at $1M ARR by the end of 2023; assuming the current 3x YoY growth rate, and a more conservative 12x multiple in the new market environment, we can expect The Beans to become a unicorn by end of year 2027. This does not take into account the two other business models the company is exploring - assets under automation and referral marketplace revenue. 

Congratulations again to Melissa, Jeff, and their entire team. Onward and upward!