Earnin in 4 Years by Alexander Gornyi

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The post was originally published in Russian on Startup of the Day. Alexander kindly agreed to republish what we think is of great value to our readers.

A monstrous 300% a year is at the same time a tiny 0.4% a day. This mathematical illusion is enough to sustain numerous microlenders, but people keep educating themselves, and regulators fight against excessive rates, too. Earnin, an American startup of the day, builds its business on an even more curious formula: a pathetic five at a credit of a hundred dollars is a predatory 5% over two weeks.

The startup lends money at a zero rate, but suggests leaving an optional tip – after all, its service is no worse than a restaurant or a barbershop. Besides, it asks for a humble amount – because, looking at the original mathematical illusion – five bucks for helping out in a difficult situation is appreciated a lot better than 250% per year.

Aside from this trick, Earnin is identical to any modern-day microlender – a fancy mobile app, instant money, same as every other business. It requires access to online bank for scoring and will only issue an amount that the lendee can return from their next salary, and to assure the money returned as soon as they appear. Although, it seems there’s no reason not to crossbreed the tip technology with an even riskier scoring.

There no way Earning can become a unicorn with a model like this, but it has found its niche. The startup’s economy is doing well with generous Americans, the company raised USD 65M in two rounds this year.


Here is a rerun from 2017. Indeed, Earnin didn’t grow into a unicorn, nor did it go IPO, but the business looks stable, ever bigger and ever more impressive numbers about its turnover get revealed in the press. The startup brought in its latest round – USD 125M already – a year after the original post

Translation: Kostiantyn Tupikov

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